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A barter transaction "moves objects between the regimes of value", meaning that a good or service that is being traded may take up a new meaning or value under its recipient than that of its original owner. [13] There is no criterion of value. There is no real way to value each side of the trade.
What makes a mutual credit accounting system, into something like a money system is the contractual obligation of account holders to close all accounts at zero, which is to say, to depart the system neither owing nor owed. The credit theory of money says clearly that money does not need to be, or be backed by, commodities like gold.
Although any accounting framework can be used, there is one approach that fits naturally for multilateral exchange. It is the simplest possible database/spreadsheet design, single-entry bookkeeping rather than double-entry bookkeeping. [citation needed] All accounts begin with a balance of zero, meaning they owe nothing and are owed nothing.
If all exchanges go 'through' an intermediate medium, such as money, then goods can be priced in terms of that one medium. The medium of exchange allows the relative values of items in the marketplace to be set and adjusted with ease. This is a dimension of the modern fiat money system referred to as a "unit of account." [20]
Economists refer to a system or network that allows trade as a market. Traders generally negotiate through a medium of credit or exchange, such as money. Though some economists characterize barter (i.e. trading things without the use of money [1]) as an early form of trade, money was invented before written history began. Consequently, any ...
Other terms include alternative currency, auxiliary currency, and microcurrency. Mutual credit is a form of alternative currency, and thus any form of lending that does not go through the banking system can be considered a form of alternative currency. Barters are another type of alternative currency. These are actually exchange systems, which ...
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A moneyless economy or nonmonetary economy is a system for allocation of goods and services without payment of money. The simplest example is the family household. Other examples include barter economies, gift economies and primitive communism. Even in a monetary economy, there are a significant number of nonmonetary transactions.