> I think what I’m missing is how a default works in this instance. If I establish a 200 unit mutual credit line with someone, spend 200, what does a default look like? Is there some time period in which I have to pay it back? Without collateral it seems that there isn’t a way to enforce payment.
Who do you think the "with someone" is? It's either a friend who is willing to loan you $200 whenever, or a credit company who will offer you $200 in exchange for information about your employment, spending, etc.
What do you think your friend does when you stiff him? He might offer a repayment plan, or to forgive your debt, or maybe he sues you in court and stops being your friend. Same thing that credit companies do.
> If I buy a good, from someone accepting offset do they pay me back in credit the value of the good that they deliver? Thus netting us back to zero?
No. That's between you and whoever you and this other someone know in common (the someone 1). It's credit, not cash.
