little big cookie shake

[keturn]

I've been spending a lot of my attention on alternative currencies lately, driven by an interest in the Portland Timebank community and partners. I've been in some discussions lately about different directions the timebank might develop in, and some of these conversations have succeeded in challenging enough of my assumptions about economies that I've concluded I have no idea how it works right now.1

I've been holding off asking this question, because it feels like a sort of novice "rtfm n00b" question, but I haven't read the manual yet and at this point it's worth writing down just to get out of my head. And after talking it over with stereotype441 at dinner the other night, I think I can articulate it well enough to do so.

A time bank is a type of "mutual credit" currency. If I'm selling you a bike tune-up service, when I tune up your bike a credit is debited from your account and added to my account. All the accounts in the system sum to zero, and nobody has to worry about who is issuing the currency and if they're issuing too much of it or what have you. (Or so the story goes.)

A natural consequence of this is that there will always be accounts with a negative balance. That's fine, a negative balance in this system is expressed as a "commitment" to provide that value in the future. But if I keep using the rules I understand from participating in the $USD economy, things don't make much sense.

The rules I have, in my old "money is an asset I have" mindset, go something like this:

• As a consumer (buyer), I want to acquire as many goods and services as I can with the resources that are available to me. I will probably never reach a state where my appetite for all goods and services is sated. I will stop only when I run out money.
• As a producer (seller), I want to do as much business as possible. Maybe because I love what I do, probably because it's profitable and I want to increase the size of my pile of money, but as long as a customer's money is good so that doing business doesn't incur a loss for me, I'll do business with them.

But when I run with those rules in an economy where the buyer doesn't stop when he hits $0, I get a situation where the buyer never stops buying and the seller never stops selling. Any exchange-for-currency is available at any time, which leads me to wonder why anyone's bothering to do any accounting at all.

So, clearly, I've talked myself into a ridiculous state here. What are the components I've left out that make this accounting structure useful?

Like I said, I expect the answer is RTFM. My reading list currently contains No More Throw-Away People (Cahn), Economics in One Lesson (Hazlitt), The Creature from Jekyll Island (Griffin), The End of Money and the Future of Civilization (Greco), and Making Money (Pratchett).2 Suggestions for additions or prioritization are quite welcome.

Footnotes:

1. Having no idea about it works is not a bad result of those conversations. Which is to say, it is a much better state than having an equivalent amount of knowledge but being under the impression that I do know how it works.
2. Okay, the Pratchett book is just for fun, but the fantastically titled The Creature from Jekyll Island is entirely serious.