FAQ

Below are some frequently asked questions about the Meritt system. Feel free to post your own questions.

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Q1: Will the Meritt Credit issuance cause inflation?

Credit is always created in proportion to the value of goods and services being produced at any one time. (Noting that value is the outcome of applying virtues to meet real needs) As a result the credit will expand and shrink in line with the real needs and capacity of the community. If the rate at which value is created should slow or shrink the available credit will soon follow suite, meaning that any inflation will be transitory.

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Q2: What happens with unresolved debts?

Ie: What happens if someone (either in an IOU context or within the Meritt system) has a substantial open debt? Ie: Someone completes 10 successful IOU transactions but has a large outstanding transaction that is unresolved?

1. At IOU stage, this won’t be a problem unless the person who is owed the IOU is unhappy and rates the issuer negatively as a result. This will affect the credit rating just like any other bad transaction. The simple lesson is not to accept a large IOU unless you trust the person.
   
2. At full participation stage, credit issued is never owed to any one person. It’s owed to the community collectively, and since the cap is not very high, it’s not a problem if someone remains in debt for a long time. As debt is generated by virtuous and trustworthy people to fulfil real needs, be they the betterment of individuals or the construction of assets, debt is ultimately an investment in into the future of the community. The only issue is if a person leaves the system with a debt. Since there is no interest attached to the debt and no way to rejoin under a new identity, we believe there is little incentive to leave the system with outstanding debt. If the system is successful, people will naturally want to stay as debit is a function of trust and the ability of The Meritt system to create value far exceeds that of other money systems.

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Q3: Is there an interest charge on the credit issued by the Meritt System?

No. There are no interest charges charged by the Meritt system. That would not stop an individual or group within the system lending money at interest – that is up to those involved.

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Q4: Can I use all my credit to take entrepreneurial risk?

Yes – however you once you’ve reached your credit limit, you won’t be able to borrow more until you’ve earned more Meritt. Think of Credit similarly to an overdraft at a bank – except with zero interest. High risk activities would generally be done via Meritt pools, so the risk would be shared.

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Q5: Where is the store of value?

The Meritt system challenges many commonly held principals of finance. For instance it is largely accepted that money must possess 4 key qualities:
1. Be a store of value
2. Be a medium of exchange
3. Be a measure of value
4. Be standard of deferred payment
While the above 4 qualities are important, they do not properly describe what money is. We believe that money is nothing more than a social contract. Just as money has taken many forms throughout history, such as Salt, Tulips, Gold, bits of paper, and digits on a computer. The exact form of money is not the most important quality. What is important is that money represents a contract (Agreement) who’s terms are are universally accepted. In other words. Money is predominately a social contract. Once this principal is understood, the quality of money is defined by the quality of the contract that money represents.
Gold is only a store of value because we agree that it is. Many cultures have existed that place no value on Gold. Assets are a store of value so long as we are able to derive benefit from them. But like all things, they can be lost, stolen, destroyed. Today they are yours and tomorrow others may have them. The quality of the social contract that money represents is the most important consideration for any currency, not just because of the above mentioned 4 qualities that are generally accepted, but because the terms of the social contract have an incredible impact on human behaviour. It is our opinion that, in the realm of human endeavour, people create value, and the influence that money has on people’s behaviour is the most important quality of money. Therefore lets consider:
1. A store of Value. The best store of value is within the capabilities of a community of people who have cultivated virtues (Love, kindness, consideration, wisdom, creativity, etc..) and the ability to practically apply those virtues to fulfil real needs. (Mathematics, language, sciences, geometry, engineering, arts etc..) The Meritt system is a social contract that builds a community of people who cultivate virtues and rewards their practical application. Once widely adopted Meritt will be an excellent store of value.
2. A medium of exchange. Assets represent a poor medium of exchange because of their lack of portability. Digital money such as the digital representation of money or assets are a much better medium of exchange due to their portability. In our opinion, social contracts encoded on Holochain provide an ideal medium of exchange because of Holochain’s efficiency and Un-enclosability (It is not controlled by banks or constrained by centralised systems)
3. A measure of value. The Meritt system derives it’s value from the the practical application of human virtues, which is the source of all value (Outside of what nature provides to us) Other forms of value such as assets are derived from this value. As such we consider Meritt to be the best measure of value.
4. Be a standard of deferred payment. The Meritt system is a mutual credit system where every debit has a corresponding credit that is recoded on a tamper evident ledger. . As such it is an excellent standard for deferred payment.
Ultimately the value of money is held within the community of people who use it. The Meritt system builds the capability required for the generation of true value, and most of all Meritt builds trust.