In Part 4, we had three people and two trades.
After an unknown amount of trades the central-banker, or record-keeper, produces an overview of accounts with negative (LHS) and positive (RHS) balances (all skilo-denominated):
We could start guessing who's been trading with whom, but it doesn't matter because no one participating in the trading is interested in bilateral balances. What matters is the multilateral, overall balance of each participant.
We can tell from the overview that Otto has been on a gift-accepting, or buying, binge.
Bad news: the following day Otto gets hit by a school bus and dies. He leaves behind no assets. A credit loss of SK400 must be recognized. Who should incur it?
Otto's account will be credited with SK400, and that entry will bring the account balance to zero. Otto's negative balance is thus settled, and the account can be deleted from the system.
Some other account, or accounts, must be debited with SK400. That's the loss part. In normal course of business, Otto would have sold goods to someone for SK400, and this someone would have got his or her account debited with SK400 without incurring any loss – the debit would have been balanced by the goods received.
Just to give you an example: If Kermit would be made to incur the loss, not only would he have previously given up goods worth SK200 without receiving anything in return, but he would need to give up further goods worth SK200 without ever receiving anything in return for any of these goods. It's like he had given a pure (but forced) gift worth SK400 to Otto.
So, which account(s) should the central record-keeper debit? Who should incur the credit loss?
I'm asking you.
There's no wrong answer, but some answers might be better than others. Things you might want to consider: fairness and participants' expectations and assumptions regarding the rules of conduct, especially given the connection to a multilateral gift economy.
I have some ideas myself, but I don't want to miss a chance for a good discussion by randomly picking just one way to do this. People together, after listening to each others' arguments, make this kind of decisions all of the time. That's how the first ever monetary system must have been built, too. (We will never know for sure.)
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