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Bartering

Description

Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.[1] It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a very limited extent. Barter usually replaces money as the method of exchange in times of monetary crisis, such as when the currency may be either unstable (e.g.,hyperinflation or deflationary spiral) or simply unavailable for conducting commerce.

Pros

  • Exchange your product or service for another without much paper work
  • Beat the fiat currency problems
  • Variation from standard capital budgeting process makes it easier to implement (i.e. no banks or credit check)
  • Capture full value of future energy savings
  • Potentially well-established and quick decision process

Cons

  • Absence of common measure of value: In a monetary economy, money plays the role of a measure of value of all goods, so their values can be measured against each other; this role may be absent in a barter economy.
  • Indivisibility of certain goods: If a person wants to buy a certain amount of another's goods, but only has for payment one indivisible unit of another good which is worth more than what the person wants to obtain, a barter transaction cannot occur.
  • Lack of standards for deferred payments: This is related to the absence of a common measure of value, although if the debt is denominated in units of the good that will eventually be used in payment, it is not a problem.
  • Difficulty in storing wealth: If a society relies exclusively on perishable goods, storing wealth for the future may be impractical. However, some barter economies rely on durable goods like pigs or cattle for this purpose.
  • Subject to internal hurdle rates and payback requirements
  • Take on additional debt
  • No tax breaks on interest paid or depreciation

Corporate barter

Corporate barter focuses on larger transactions, which is different from a traditional, retail oriented barter exchange. Corporate barter exchanges typically use media and advertising as leverage for their larger transactions. It entails the use of a currency unit called a "trade-credit". The trade-credit must not only be known and guaranteed, but also be valued in an amount the media and advertising could have been purchased for had the "client" bought it themselves (contract to eliminate ambiguity and risk).

Internet bartering

Swapping is the increasingly prevalent informal bartering system in which participants in Internet communities trade items of comparable value on a trust basis using the Internet. The most notable disadvantage to electronic barter is inherent in Internet commerce, that of trust. How can consumers have confidence that they will receive what they bargained, or paid, for? Although the Internet based consumer market has by its continued existence and growth demonstrated that it works, there is never a guarantee of satisfaction in consumer to consumer transactions. There is no absolute defense against fraud. However, it can be argued that when a person barters there is less incentive to deliberately mislead. Neither party is paid; each party receives something that would only then have to be converted to cash.

Barter markets

In Spain (particularly the Catalonia region) there is a growing number of exchange markets.[14] These barter markets or swap meets work without money. Participants bring things they do not need and exchange them for the unwanted goods of another participant. Swapping among three parties often helps satisfy tastes when trying to get around the rule that money is not allowed.[15]

According to the International Reciprocal Trade Association, the industry trade body, more than 450,000 businesses transacted $10 billion globally in 2008 — and officials expect trade volume to grow by 15% in 2009.[16]

System D

System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of “l’economie de la débrouillardise.” Or, sweetened for street use, “Systeme D.” This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy. A number of well-known chefs have also appropriated the term to describe the skill and sheer joy necessary to improvise a gourmet meal using only the mismatched ingredients that happen to be at hand in a kitchen. For examples, see "Euro Free Alternative Currency Takes Off".

Swap Machines

The Swap-O-Matic is a vending machine that encourages users to SWAP rather than buy! It playfully reminds us that reusing and recycling can be just as fun as buying something new. Capacitors for your goods. Great idea.

Example Site

See this page for how one site does it: http://www.barterquest.com/home/article/summary and for one on the east end of Long Island see http://eastendbarter.com/store.

For more information

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