It's a shame that Theymos said that merit sources create merits out of nothing. It makes it sound as if they are like the Rothschild bankers who can create money out of nothing. I gather that merit sources have a  quota of merits to be awarded, and they get replaced 30 days after they have been rewarded. I don't think they are mods, although some of them could be, they are responsible members who can be trusted not to sell merits, or to give them away to their friends.

The system is really quite clever. It gives merits to contributing members of the forum ( these are known as sMerits), and this introduces a measure of peer approval for posts. The merits from the source members are there to provide a constant stream of merit to encourage quality posting.