Even so, Keynes proposed a mutual credit system called the International Clearing Union instead of a gold standard, but it was rejected.
[citation needed] In the mainstream economy, money is regarded as a scarce commodity, which is rented out many times simultaneously by those who have it, to those who don't.
[citation needed] This practice leads directly to hoarding and thus scarcity of money, to a growing wealth gap, to the poverty trap, the boom/bust cycle, the economic 'growth imperative' and many other seemingly eternal social evils.
Similarly, the very politicised question of the size of the money supply is solved because the credit is perfectly elastic; it is available in whatever quantity the debtor is trusted to repay.
Some systems allow the 'house' account unlimited spending, and this destroys the equilibrium, resulting either in inflation, or in recession.
In mainstream economics high bank balances are rewarded (with interest), but the celebrated members of mutual credit systems are both earning and spending.
Mutual credit systems can perform, reasonably well, all of the three classical functions of money, as store of value, medium of exchange and unit of account.
[citation needed] And while some heterodox economists such as Silvio Gesell argue that money should not even be used as a store of value,[citation needed] as a medium of exchange, mutual credit is unrivalled: Note that since mutual credit transactions do not involve the movement of a commodity, they are by nature both traceable and reversible, in contrast to say, cash or Bitcoin.
There are three main social institutions said to use mutual credit today, trade exchanges, local exchange trading systems, and timebanking associations, each with a number of offshoots and variations, and their own understanding of what mutual credit means.