The need for modern barter and trade systems is clearly evidenced by the rise of cryptocurrencies. These digital tools allow people to send and receive value without central control. While not the same as traditional barter and trade, they share a common goal, which is to give people more control over value and exchange.
However, cryptocurrencies remain tied to global networks and complex technologies. Local barter and trade systems, by contrast, require only agreement and cooperation at the local level. The challenge, as is always the case, is determining the value of goods in barter and trade.
Does Currency Facilitate Barter and Trade
Currency is a tool that people use to measure and exchange value.
It does not have value by itself.
Its sole purpose is to represent value in a way that is recognized by all participants within an economic system.
This allows people to buy, sell, save, and plan. Currency acts as a medium that connects goods and services through a shared standard of worth and value.
In its most basic form, currency replaces direct trade. Without currency, people must barter, which means they must find another person who both has what they want and wants what they have. This can be difficult and slow.
Currency removes this problem. It allows someone to sell a good or service to one person and then use the currency earned to buy something from someone else. This increases the number of people who can participate in trade and makes economic exchange more flexible.
Currency also serves as a unit of measurement. It gives people a way to compare different things. For example, if one tool costs ten units of currency and another costs twenty, a person can understand the difference in value.
This helps people make decisions. It also helps businesses set prices, workers understand wages, and planners prepare budgets. Without a unit of measurement, people would not be able to compare or record value in a consistent way.
It is not unreasonable to determine that barter and trade systems can, and likely should be parallel to the economic system in place. This prevents the need to introduce new and unfamiliar economic principles. This offers at least the potential for introducing barter and trade systems that remain familiar, even to more simple people who have no desire to understand complex economic principles.
The Federal Reserve and Central Banking Systems
The Federal Reserve is the central bank of the United States. Congress created the Federal Reserve in 1913. The main purpose was to create a stable and safe financial system. Central banks in other countries have similar roles.
The main goals of central banks are to ensure economic sustainability through the control the supply of money. Rarely has a bigger lie been told. The main goals, indeed the purpose central banks were introduced, is to control the currency, not money.
Currency is generally the legal tender issued and controlled ostensibly by governments. Within the central banking systems, the central banks, and thus the currencies are rarely, if ever, controlled by government.
Money comes in many forms and is rarely issued or controlled by the government.
Central banks use tools like interest rates and buying or selling government bonds. They try to keep the value of currency stable. They also help banks when there are problems, though not at their own expense.
These powers were ceded to the Central Banks in order to stabilize domestic and international economic and financial systems, and to allow international trade to be conducted with fewer challenges.
Currency provides a unit of measurement to facilitate trade, as does money, though neither is always stable.
Failures to Stabilize Currency and Money
Over time, central banks have consistently failed to meet their stated goals and objectives.
Many countries have seen periods of high inflation, where prices rise quickly. Some countries have faced deflation, where prices fall and the economy slows down.
Central banks have failed to stop major financial crises. The Great Depression, the 2008 financial crisis, and other events show that central banks can struggle to keep economic and financial systems stable.
When central banks print too much currency, the value of the currency falls. This makes it harder for people to buy what they need. When central banks do not act quickly, economies can slow down or even shrink.
Loss of Trust in Fiat Currency
Fiat currency is a type of money that a government says is legal to use, but it is not backed by gold or silver. In the case of the US dollar, the global reserve currency, it is backed by nothing but the faith and good credit of the US government.
Never mind they have more than thirty trillion in debt and around eighty trillion US dollars in unfunded liabilities.
Keep the faith.
Trust the experts.
People must trust the government and central bank to keep the value of this money steady. When people see prices rise quickly or banks fail, they start to lose trust in fiat currency. Many people worry that their currency will lose value. Some people look for new ways to keep their savings safe.
Cryptocurrencies as a Step Toward Barter and Trade
Cryptocurrencies are new forms of money that use computer technology and the internet. Alternatives to traditional units of value and worth like cryptocurrencies are a way to actively engage in barter and trade without using government issued currency.
The name “cryptocurrency” is ironic in some sense. It does technically refer to a currency as a median of exchange. At the same time, it seems to poke fun at the idea that, while anyone can track cryptocurrency transactions, they are not controlled by government or central banks.
As noted with barter and trade, many cryptocurrencies are directly tied to existing financial markets. This allows for an easier and more immediate understanding of the value and worth.
Cryptocurrencies do not need a central bank or government. People can send money to each other directly, anywhere in the world. This system is open to everyone and is not controlled by one group as a rule.
Cryptocurrencies are like a new kind of global barter and trade system. People trade digital coins for goods and services. This is different from using government issued currency.
Many people use cryptocurrencies because they want more control over their money. They also want to avoid problems with banks and fiat currency.
The Push for Global Barter and Trade
The rise of cryptocurrencies shows that people want new ways to engage in barter and trade. Global barter and trade systems are growing in popularity and prevalence.
These systems let people exchange goods and services directly, often using digital tools. This global trend is a sign that people want more choices. It further serves as evidence that barter and trade systems can work independent of the established government issued currency.
Global barter and trade help people in different countries work together. These systems can lower costs, speed up trade, and make it easier for people to do business. The growth of global barter and trade shows that people are looking for better ways to exchange value.
Barter and Trade for Local Resilience
While global trade is important, local barter and trade are also necessary. Local systems help communities stay strong when there are problems with national or global markets. Localized barter and trade systems are not so easily disrupted by external forces.
Local barter and trade let people exchange goods and services without using money. This helps people get what they need, even when banks or governments have problems.
Local economic resilience means that communities can survive and recover from shocks. Barter and trade systems help people support each other. They keep local economies running, even during hard times. Local systems also help people trust each other and work together.
Local Economic Resilience and National Stability
One historically verifiable instance of this was in the Philippine Charter Change that began in 1997 and created national disruption economically and socially. When local economies are strong, the whole country is stronger. Local barter and trade give people more choices. They help people keep working and trading, even when big systems fail.
This supports the larger economy and helps keep society stable. Local resilience is important for national security and social peace. The ability of local communities to actively participate in barter and trade, even as the national currency lost its value, prevented larger outbreaks of societal disruption.
Had the local communities not been capable of actively engaging in barter and trade, the situation, despite the severity, could have been worse. Many big city residents went home to avoid the disruption. The relative stability of global barter and trade systems ultimately played a key role in the rapid restoration of the Philippine currency.
The Future of Global Barter and Trade Systems
Global barter and trade systems will likely grow in the future. More people are using digital tools to trade without banks or central currencies. The OPISAC creation of local barter and trade systems is merely a reflection of necessities in an increasingly challenged global financial system.
Central banks are trying to keep up by creating digital currencies. These new currencies are called central bank digital currencies. However, many people still prefer systems that are open and not controlled by one group.
As trust in fiat currency falls, people will look for new ways to engage in barter and trade. Global and local barter and trade systems will become increasingly important. These barter and trade systems help people stay safe and keep trading, no matter what calamities may arise. As such, they remain a key component of sustainable development.