Credit Clearing

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Description

Thomas Greco:

"Credit clearing is the highest stage in the evolution of reciprocal exchange, which, in effect, makes money as we’ve known it obsolete. The fact is that goods and services pay for other goods and services, whether we use money as an intermediate payment medium or not. Direct credit clearing makes the use any third party credit instrument (money) unnecessary.

A credit clearing system is an arrangement in which a group of traders, each of whom is both a buyer and a seller, agree to allocate to one another sufficient credit to facilitate their transactions among one another. The rest is merely bookkeeping.

In such a system, the total amount of credit outstanding at any point in time can be thought of as the money supply within the system. That will be the sum of either the positive balances or the sum of the negative balances. These two sums of course must always be equal to one another. Note how the money supply fluctuates up and down as credit balances are spent and debit (negative) balances are reduced when sales are made by those who had a debit balance." (http://beyondmoney.net/2007/08/06/credit-clearing-pure-and-simple/)