Alternatives to Banking, Part 2 - Barter

Barter as I am sure everyone knows is swapping one item for another directly, without using a medium of exhchange or money at all. so...-

Barter??

Barter???!?!

Isn't that completely pointless and impossible? I mean who wants to trade half a goat for some chickens?!!!111

To which I can answer truthfully, "large scale barter still happens!" Rather winningly it's often referred to as the reciprocal trade industry. The reason that barter can still happen is that some people have a hell of a lot of goats and some other people have a hell of a lot of chickens. Once the barrier of divisibility is removed, then all that needs to be set between the barterers (terrible word, if I just made it up sorry) is a ratio between the items that they wish to swap.

Half a ton of steel for twelve tonnes of ionised water? Deal. 250 goats to a thousand chickens? Let's go.

The second barrier to barter is finding someone who wants what you have to offer, not everyone wants chickens in exchange for goats, which is why we have money in he first place. There is a possibility that technology can in some degree remove the need for a coincidence of wants, the internet and other technology can be used to close that gap.

Students already do this with textbooks, there are online barter systems for video games, DVD's and other items. Corporations use barter for larger transaction, artists barter their time for items directly.

The major barrier is the taxman of course. he doesn't like barter much and will charge taxes on bartered things based on a number he has pulled from his ass. The bankers don't like barter much - no arbitrage or other opportunities to make fake money from thin air. The government doesn't like it much because barter is more difficult to track than having being plugged into their system, it's much harder to regulate. There is also the problem of a most commonly bartered item arising, which would displace fiat. Ebay was investigated by international tax offices for such an item appearing at one point!

An interesting form of barter is time bartering. Three hours of a doctors time for eight hours of a stonemasons or sixteen hours of a cleaners. The ratio being set by agreements between the people in the system. Such systems are not difficult to set up in an emergency - they have been used after economic collapses in places as far apart from each other as Thailand and Argentina.

Next up - trade exchanging!