The New Earth Promissory is a medium of exchange explicitly for use by New Earth Project Members and Community Residents. The economic foundation of the New Earth Promissory is that of ‘Mutual Credit’.
At no point can a New Earth Promissory be denominated against any conventional currency unit as it is not a capital asset and is in fact created and extinguished by its users in accordance with mutual credit principles.
The New Earth Promissory is a true energy backed currency.
There is a common misconception that an energy backed currency is one which is backed by energy produced by energy systems i.e. as measured against kWh. In contrast to this, the New Earth Promissory is instead backed by the only energy which has any relevance as a pure medium of exchange between human beings – human energy.
New Earth Promissories encourage transacting parties to confirm “value” received. Thus human energy is valued by the degree to which it is appreciated.
Leonardo Wild, in his book Demythifying Money, describes it thus:
“Mutual credit implies an issuance against transactions. That is, if we buy something—a good or a service—the value of the transaction is equal in amount to the monetary emission . This means that the moment a purchase happens, one of the participants receives the product in exchange for delivering an amount of money that did not exist before the transaction took place.
We have three entities that participate in the process, alternating their roles:
- The participant who delivers the real value. (A seller who offers goods and/or services.)
- The participant who receives the real value, against which he/she issues currency. (A buyer who demands goods and/or services, for which he/she gives money.)
- The group or the economic circuit. (When a person or an institution is part of a social or commercial circuit, it accepts the social agreements as a participant. The basic social agreement is that participants must offer real value—goods and/or services—against their right to issue money.)
It works in the following way:
- A buys a basket of apples (the real value) from B for the price of 20 units of transaction value (UTV). To do this, A must pay B this value:
- A generates money, by electronic means, and gives it to B. (The amount of money has no value in itself, it works as a registry of transferred value.)
- B gives A a basket of apples, thus transferring a real value —the apples— and receives a memory of the transaction by the defined price of 20 UTV, the money.
In this exchange, A receives a “good” from B, and gives B 20 units of money. In this transaction, the debt is cancelled. A has already paid B, and B has given A what A wanted to acquire. This means that, after the exchange, both parties have reached a state of equilibrium between themselves.
- B has now 20 UTV in favor, and A has 20 UTV against.
- This means that B has the right to acquire any good or service for the value of 20 UTV from the social group he/she belongs to, that is, the group as a social organism owes B this amount in “real value.”
- This also implies that A has an obligation to return to the group real value—goods and/or services—for the amount of 20 UTV.
As the transfer of UTV money is a “memory of the value of a transaction,” it makes no sense for someone who is in the negative to pay interest. This would be like saying that although we have already paid for our purchase, we must pay even more. Mutual credit means that the group gives a credit to those who are in negative, and those who are in positive are giving the group a credit. The point being that those engaged in each transaction are “mutually balanced.” There is no pre-established “maximum negative value limit” for users of the New Earth Promissory, rather users are encouraged to “go through zero” (up or down) as frequently as possible.” Traditionally the limiting factor of such a system has been the transportation of goods and the services on offer. In most cases transport requires old money for the payment of fuel and maintenance. The New Earth Promissory overcomes this problem by interfacing with the New Earth Exchange through established and suitable mechanisms as and when necessary.
The New Earth Promissory is not usurious, since no one can control the issuing of your energy (or currency) except you.
Mutual credit means that the group gives a credit to those who are in negative, and those who are in positive are giving the group a credit. The point being that those engaged in each transaction are “mutually balanced.””
There is no pre-established “maximum negative value limit” for users of the New Earth Promissory, rather users are encouraged to “go through zero” (up or down) as frequently as possible.