barter

Barter is New Medium of Exchange as Credit and Payment Systems Collapse

Monday, February 02, 2009 by: Barbara L. Minton
Tags: barter, health news, Natural News

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(NaturalNews) In just the past week several pillars of the Fortune 500 have declared more than 75,000 layoffs worldwide. This is an indication that the global economic and credit crisis is getting worse, not better. Yet Americans remain optimistic that the crisis will blow over soon. Part of this optimism is based on their continuing ability to get what they want using a credit card, or paper money that carries no intrinsic worth. In other parts of the world this no longer works. High food prices and the credit crunch have forced some countries to revert to the ancient practice of bartering, a practice that is also seeing a revival in America correlated to the financial crisis.

A recent article from the Financial Times reports countries from Malaysia to Morocco say they have reverted to the ancient practice of bartering for food, making deals to import commodities ranging from rice to olive oil.

The following three paragraphs are from the Financial Times article:
"The revival of these trade practices, used rarely in the last 20 years and usually by nations subject to international embargoes and the old communist bloc, is a result of the countries` failure to secure trade financing as bank lending has dried up.

"The countries have not disclosed the value of any deals, and some have refused even to confirm their existence. Officials estimated that they ranged from $5m for smaller contracts to more than $500m for the biggest.

"Josette Sheeran, head of the United Nations` World Food Programme, said senior government officials, including heads of state, had told the WFP they were facing difficulties obtaining credit to purchase food."

Credit is continuing to dry up in the U.S.

As of now, credit is still available in the U.S. although requirements to get it are much tougher. When payments are not made on time, credit is cancelled or interest rates are jacked up as high as 32 percent per year. The dollar still has some value as long as global investors continue to view the U.S. as the last safe haven. But right now feels a lot like being in the eye of a hurricane. Some actions yet to come include the Federal Reserve lowering the fed funds rate to zero, the new stimulus package proving to be a dud, further carnage to the balance sheets of banks as the commercial real estate market implodes, and significantly more layoffs. Following these event there will be little left to do except allow natural market forces to take over.

Globalization is the great economic leveler

The point of globalization is to homogenize and harmonize the population of the world to allow for centralized government. This means a leveling of incomes and standards of living throughout the world. Globalization was sold to citizens of countries where the standard of living was high as being the way to bring an increase in living standards to the developing countries. The fact that these developing countries are now resorting to the barter system is a graphic demonstration that this is not the real direction globalization is taking.

In order for developing countries to advance economically, resources and wealth must flow in their direction. This is not happening. Less developed countries often depend on the export of raw materials and commodities, but world wide depression means prices for these materials have collapsed. Unqualified labor has constituted the main comparative advantage of less developed countries, but exploding levels of layoffs have swelled the world`s pool of workers willing to do anything to support their families. Elevating the standard of living in poorer countries necessitates huge capital investment in infrastructure and institutions, but world capital markets have dried up.

If less developed countries cannot elevate to levels promised by proponents of globalization, there appears to be only one other alternative. The standard of living in richer countries must fall to allow for the success of the globalists` goals of homogeneity.

Signs of return to the barter system are already appearing in the U.S.

Caught in the grip of the credit crisis, small business owners are resorting to the barter system as a way to keep their precious cash in reserve. Frozen capital markets mean little new money is finding its way to Main Street. Loans to small businesses have fallen by 30 percent from pre-crisis levels, so cash is prized. Small businesses have historically been the growth engine for the American economy, creating the bulk of new jobs. Now without credit, they are shedding employees at an alarming rate.

Barter exchanges may be one of the few businesses to thrive in today`s environment. According to a recent New York Times article, barter exchanges range from publicly traded entities like International Monetary Systems and Itex Corporation to smaller companies like U-Exchange.com. Membership and transactions are growing at a rapid rate, with one exchange reporting a 70 percent increase in business since the beginning of the credit crisis.

In the past, bartering involved the simple exchange of goods between one person and another. Today multiple parties can meet through online exchanges and accumulate credits that can be used against future transactions. Participants from around the world can participate. Hundreds of exchanges are available online. Bartering in the U.S. is estimated to generate more than $3 billion in business, and this figure does not include direct bartering between corporations. Some of the barter exchanges even offer credit to members who have been turned away by traditional lenders.

Websites like SwapThing.com offer swaps for $1. They have millions of items listed ranging from antiques and electronics to comic books. Sites like these make bartering seem like fun, something the kids might enjoy.

Even on the individual to individual level bartering is on the increase. Watches, baseball cards, cupcakes and cookies, artwork, a journal entry, a bike and a dog were all accepted in a single day as barter for dentistry in Tupelo, Mississippi. In St. Louis, out of work contractors are eager to barter for basic goods and services that include legal counsel. A New York attorney has offered to prepare simple wills and healthcare proxies in exchange for getting his floors sanded and his house painted.

Barter should be a consideration in everyone`s emergency plan

On the survival level there appears to be some resistance against thinking about and planning for bartering. It may be that the idea of bartering between individuals for basic necessities implies a level of chaos extreme enough to be mind numbing and to cause a paralysis of will. However, anyone who foresees financial Armageddon may want to prepare a barter kit to keep along side other emergency provisions.

A barter kit should contain anything thought to be of worth and usable as currency in a barter transaction. Clearly food will have the highest priority in an emergency situation. People will need to eat, and food supplies may be interrupted or non-existent. Credit and payment systems must be working in order for food to be transported, stored and displayed in stores. Credit and payment systems must be working in order to access and use cash or credit. Having extra food beyond what your family will immediately need will have great value to someone who is hungry.

When planning your kit, remember that long-lasting and durable items will be in great demand in a
period of breakdown. People will quickly change their eating habits when hunger sets in and there is no other choice. Here are some items to consider in your barter kit:

Canned food items should be those that provide a decent level of protein as well as basic nutrition. Canned beans are a great choice. Canned vegetables, fruits, soups, and meats will be easily bartered or traded during a time of systems collapse.

Dried food items like dehydrated fruits, nuts and jerky should also be included, as anyone seeking nutrition will be interested in these.

Comfort food items will be in demand by people with sugar addiction and children who have been brought up to think eating sugary food is a treat. Drink mixes and hard candy will be valuable.

Basic personal care items are also useful for barter, as whatever items people have run out of will be in demand. Feminine hygiene products and soap would be good barter items.

Include several manual can openers in your kit.

Be sure the food in your barter kit is food that is in addition to the food you and your family will need to survive for a period of time. Plan your own food stash and your barter kit based on what your budget and storage space will allow.

Sources:

Javier Blas, Nations turn to barter deals to secure food, FT.com.

Micky Meece, The Cash-Strapped Turn to Barter, The New York Times.

stealthsurvival.blogspot.com.



About the author

Barbara is a school psychologist, a published author in the area of personal finance, a breast cancer survivor using "alternative" treatments, a born existentialist, and a student of nature and all things natural.

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