Mutual credit is a way for a group to create its own spendable “money” simply by agreeing to keep a shared ledger. It’s closed-circle-accounting: every time someone goes negative, someone else goes positive by the same amount, so: > the **sum of all balances is always zero**.
No external cash needs to be “brought in” first; purchasing power appears at the moment of trade as matched IOUs inside the group.
Think of it like your metaphor: a **cell with a membrane**. Inside the cell, members trade with one another using account balances. Value circulates internally; it isn’t drained away by hoarding the unit itself, because there’s no pile of tokens to stash — only reciprocal promises recorded on the ledger.
It is important to consider the structural and governance elements that we need to put in place to manage a mutual credit system:
# A quick mental model - **Negative balance = you owe value to the circle** (a promise to contribute later). - **Positive balance = the circle owes you value** (a claim on future goods/services). - Since claims and obligations are equal and opposite, **total balances = 0** — always.
In short, mutual credit is a money-as-relationship system: instead of scarce tokens, it’s coordinated trust, bounded by rules, that turns the *ability to produce for one another* into spendable power right when it’s needed.