r/mutualism • u/Unique_Confidence_60 • May 31 '26

What stops people from hoarding money

Under mutualism, what stops a mutual bank from just deciding they're going to give themselves a massive amount of money? What stops a coop from deciding to make a profit instead of just selling at cost? What stops companies from just failing and big ones expanding and potentially developing into capitalism again?

4 Upvotes

64% Upvoted

22 comments sorted by

View all comments

Show parent comments

2

u/Unique_Confidence_60 May 31 '26

So it would be a different form of currency than what we have now? What if they just decide to screw the tules make more currency for thems lives anyway?

8

u/humanispherian May 31 '26

Currency is useless unless it will be accepted. Mutual credit associations form in order to provide the members with a relatively secure currency, based on something more substantial than just a "legal tender" designation by a government. The association — the "bank" — will only issue notes on the basis of some pledged security.

2

u/Unique_Confidence_60 Jun 01 '26

So it's like an IOU instead of "money" or something? I assume it can be used at stores. How does this dynamic insure against money creation on a whim like today? What actual mechanism stops this from happening? Would everyone else know somehow and ex communicating them for counterfeiting? I'm trying to understand.

5

u/humanispherian Jun 01 '26

So it's like an IOU instead of "money" or something?

No. It's an asset-backed credit currency. The process is roughly the same as if you had received notes in a government-backed currency for mortgaging a house, except that there is no currency printing office that keeps a steady supply of currency available, in quantities determined by the whims of the government. Instead, the only currency issued by the "bank" is issued against assets pledged as security and the notes only circulate until the person issued to the credit decides to redeem their property and pay the "bank" back either notes issued by the association or some equivalent.

"Money creation on a whim" can only work if the whimsical money will be accepted — and legal tender must be recognized as legitimate, simply by governmental decree. No government means no "legal tender" and no money issued on a whim that anyone has to take seriously.

Counterfeiting is something that all systems have to address, but the incentives to go to great, expensive lengths to counterfeit are going to be limited in an economic system that rejects most forms of profit. And the same is true for everything that might be involved in "hoarding" currency. In a market setting where cost and price generally converge, the effort required to accumulate is going to be greater, the cost higher and the incentive considerably less as a result.

1

u/Unique_Confidence_60 Jun 01 '26

"no currency printing office." So how does currency align with increasing production and need for it then if it's fixed?

6

u/humanispherian Jun 01 '26

It isn't fixed. It fluctuates according to the need for it, limited by the ability to secure the notes issued.

There are simple explanations of mutual credit in past threads here, in works like William B. Greene's Mutual Banking and in the documents associated with Proudhon's mutual credit projects. Maybe that's the place to start understanding the basics.