--- tags: reference, definition --- # Producer Credit (Producer Credit money system) ## TL;Dr Producer Credit refers to any credit-based means-of-exchange system where credit-money is created by entities at the point of purchase on the basis of their willingness to accept payment for their future product in units of that money. ## Overview EC Riegel understood the problem that Marx identified with money framed as a commodity - that it becomes the 'top' commodity - a thing to hold in and of itself. In brief, transforms the economy from a C-m-C economy (where money is a useful means-of-exchange whereby commodities can be traded as needed) into an M-c-M economy, where commodity trading is a means whereby to accumulate money - capital. Riegel proposed that 'trade creates money, and not vice-versa' - that money should be created at the moment of trade, when a producer buys something, issuing credit as the means-of-exchange to fund the purchase. > The new concept of money is that, to be sound and stable, and in adequate supply, it must spring solely from the same source from which all wealth springs, namely – the people, and that, to effectively coordinate with our mass production system, the people must issue the money necessary to buy their production. — (*Private Enterprise Money*, Riegel, p8) Producer Credit is not a 'commodity-framed' money. Units in such a sytems are a 'measure of value', without 'thing-like' properties, providing information about a creditor/debtor relationship, rather than implying any notion of inherent value of the unit.
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Root (start here)

This article is intended to serve as the permanent 'place to begin' for this wiki, either as a reference for quickly navigating to specific resources or for new contributors to orient themselves. As such it looks a bit like a collection of odds-and-ends, but hopefully a very useful one! Key entries Read me - a statement of purpose for this wiki plus guidelines for contributors. Reference - definitions, terminology and mathematical notation used in this wiki. Things to measure - top-level entry listing the categories of entity (e.g. Trade Credit Club) or field (e.g. environmental impact) that research is focused on. Index of all entries An alphabetised list of all entries for quick reference.

10/28/2021
Late payment

This is classified as a potential source of risk reduction for Trade Credit Club members. As discussed in the risk reduction entry, late payment risk is analysed in terms of the probability distributions associated with the time intervals between invoices being issued and settled; to avoid potentially misleading assumptions, there is no attempt to quantify risk in fiat units. There are two categories of payment that have to be considered; bilateral payments between trading partners, and (after the establishment of a trade credit club) payments to or from a dedicated club account that keeps members within their agreed mutual credit balances. Bilateral payments In this section the replacement of fiat with mutual credit to settle bilateral trade credit invoices is considered. It is assumed that the numbers of transactions and their amounts are unchanged, and so the argument for late payment risk reduction is based on the plausibility of influencing behaviour such that the distributions of time intervals associated with invoice settlement for mutual credit become more favourable than the distributions associated with the erstwhile fiat payments. Trade credit settled in fiat

6/14/2021
Read Me

Purpose This collection of pages is intended to work as a developing knowledge commons around non-extractive trade relations, and the contexts in which these can occur. By 'non-extractive' we refer to a basic condition, that interest is not charged to debtors, nor accrues to creditors. Guidelines for contributors The collection is largely self-structuring, through links from one page to another. There is no canoncial ordering. Thus, there is no 'grand narrative' - rather, pages are generally rather short, addressing a single 'knot' in the complex weave of mechanisms, concepts, techniques and framings that are required to make sense of the topic. How this works in practice is in development just as much as the content is. So there are no hard rules, and probably much inconsistency of detail. That's just how it is (but please use the maintenance log to draw attention to anything that might need fixing). Contributors are few, working together to improve as we go. Some general guidelines on working practices:

5/10/2021
Account balance circularity

This is categorised as an account metric. In a mutual credit system, participants' account balances must be kept with limits. Maintaining a balance close to either limit results in reduced scope for buying or selling, whilst holding a large positive balance corresponds to exposure to systemic risk. It will therefore generally be in the interests of each member to maintain a balance close to zero much of the time. This is also desirable from the perspective of the other network participants; in the short term a large negative balance indicates that the member has received more value than it has supplied to them and a large positive balance means less liquidity available to facilitate trade, whilst in the longer term it prevents the emergence of harmful balance inequalities and hoarding of credit. It is therefore useful to have a metric that reflects the tendency of an account balance to return to or hover around zero. Since all credits issued by a participant must ultimately be redeemed with them, there is also a sense in which such a metric reflects the 'circularity' of that account's activity. If the notion of 'circular money for a circular economy' has merit, then this could also provide a point of departure for analysing the effect of mutual credit networks on the material circular economy. This note introduces the 'zero crossing frequency' as an appropriate measure of account health in the three respects described above; individual utility, desirability from the perspective of other participants and propensity for circularity.

3/18/2021
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