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Thread: weekend commentary - The Rebirth of Barter

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    Default weekend commentary - The Rebirth of Barter

    from


    (snip)"The Rebirth of Barter

    One of the most important articles I have read this week comes from Forbes contributor Gordon Chang. In it he states that China is preparing to avoid U.S. sanctions on Iran by paying for oil with gold. Not only that but he also mentions that China has already been bartering with Iran to get a hold of petroleum. He states:


    So how can Beijing keep both Iran’s ayatollahs and President Obama happy at the same time? Simple, the Chinese can avoid the U.S. sanctions through barter. China has already been trading its produce for Iran’s petroleum, but there is only so much gai lan and bok choy the Iranians can eat. That’s why Iran is also accepting, among other goods, Chinese washing machines, refrigerators, toys, clothes, cosmetics, and toiletries.


    The barter trade works, but Iran needs cash too. As it is being cut off from the global financial system, the next best thing is gold. So we should not be surprised that in late February the Iranian central bank said it would accept that metal as payment for oil. Last year, China imported $21.7 billion in Iranian oil and exported $14.8 billion in goods and services. As the NDAA goes into effect, look for Beijing to ship gold to Iran to make up the difference.

    Thus, the leadership in America in its infinite stupidity has actually accelerated the demise of the U.S. dollar as the world’s reserve currency. After its “kinetic action” in Libya succeeded in toppling the regime there, Washington’s geopolitical hubris grew and it has attempted to muscle Iran into a corner. Instead, all it has done is alienated our “allies” that need Iranian oil to survive and in the process quickened a move away from the dollar to settle certain transactions. Read Gordon’s article here.



    In a similar move on a more micro level, the government of Spain in a similar desperation has banned the use of cash transactions above 2,500 euros (read this great article here on it).



    How do you think citizens are going to respond to this? People are already in the streets. They are not pleased with what is going on. Then the government is going to tell them they can’t use cash amongst themselves so that the authorities can track every single thing they do and bleed them with taxes until they are slaves on a banker plantation. Everything is going to go black market and to a barter system. It will happen country by country as governments get increasingly desperate and the authoritarian clamp down continues. It will happen on an increasing level until all of these house of cards bureaucratic states fail and something new is reborn. In case you haven’t seen it yet, this one town in Greece is already leading the way. This story outlines what will be a mega trend globally over the next decade.



    (snip)

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    Default Re: weekend commentary - The Rebirth of Barter

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    Quote Originally Posted by Kirakonstantin View Post
    More fear-mongering? Really? Yes, this is not the 1990's anymore. Yes, things are changing. Either dance or don't. Freaking out and sowing fear isn't going to help anyone.




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    Default Re: weekend commentary - The Rebirth of Barter

    ^^^ me too ! But there is an inherent problem with any 'barter' system in today's society. Consider the following ...

    Basic Essential skills
    - vegetable and grain farming
    - animal 'herding'
    - hunting & fishing
    - nurse / midwife / healer
    - pickling / canning / food preservation
    - spinning / sewing
    - woodcutting

    First Tier skills
    - medicine / herbalism
    - carpentry, plumbing, electrical
    - engine and machinery repair
    - gun repair / ammo reloading
    - weaving and leathermaking
    - brewing and winemaking
    - meat processing / butchering
    - grain processing / baking
    - non-wood based fuel / energy

    The point of these very short and incomplete lists is that a barter system only works as long as everyone working under that barter system has something of real and necessary 'value' to offer to others in that same barter system !!! Under a barter system, people whose only 'skill' is manual labor at one end of the spectrum, and people whose 'skills' involve management, finance, 'luxury' services etc. at the other end of the spectrum, really don't have anything of immediate need and immediately important value to offer. The reason that the example barter system works in that small Greek village is that it's membership is limited to that half ( or less ) of the local population who actually have something of 'value' to offer.

    Or put another way, there are just as many village residents whose only 'skills' are either ( surplus ) unskilled manual labor or ( non-essential ) higher level specialties. At present, these people are not included in the village's barter system ... thus these people are essentially dependent on 'outside support' from the gov't ( which is rapidly losing it's ability to borrow / tax sufficient amounts to continue providing that support ) or from some sophisticated business / financial structure ( that is rapidly headed for bankruptcy).

    What happens when people with 'unneeded' and 'non-essential' skills are no longer able to receive that 'outside support' ? Probable answer - they begin to TAKE what they need giving nothing of value in return !

    How can a person with 'unneeded' or 'non-essential' skills exchange something of actual value in a barter system in order to obtain needed essentials ? Probable answer - via a medium of exchange with perceived intrinsic value in and of itself i.e. gold, silver.

    The answer to those two questions is, of course, why gov'ts CANNOT and WILL NOT allow barter systems / black markets to be ( openly ) re-established. Under a barter system / black market, it is impossible to 'tax' value away from the providers of real / essential goods and services in order to transfer that value to those with 'unneeded' skills and 'non-essential' skills.

    The answer to the second question also arguably explains why some people whose specialized skills dependent on the existance of a sophisticated business / financial structure are converting the 'value' they are still able to generate while that system still exists into something of perceived intrinsic value i.e. gold, silver ... in anticipation of the day when that system collapses and colored pieces of paper money will be recognized for the REAL value it actually contains ( i.e. essentially nothing ).
    Last edited by Melonie; 04-29-2012 at 07:35 AM.

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    Default Re: weekend commentary - The Rebirth of Barter

    Ha! Yes! Be careful , you are sounding like a survivalist!

    I see a return to small scale localised economies in the world future.
    Tiny tweaks----->BIG CHANGES

    Quote Originally Posted by Kirakonstantin View Post
    More fear-mongering? Really? Yes, this is not the 1990's anymore. Yes, things are changing. Either dance or don't. Freaking out and sowing fear isn't going to help anyone.




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    Default Re: weekend commentary - The Rebirth of Barter

    ^^^ actually, I don't buy into the 'survivalist' mentality at all ... since it's basic premise involves A. hoarding of huge amounts of 'necessary' goods, plus B. creating a 'bunker' intended to cut yourself / your family / your particular small group off from contact with others, plus C. arming yourself sufficiently to effectively deter others who will eventually attempt to TAKE what you have hoarded. This simply can't work in practical terms, since by definition you will probably be out-numbered at least 100:1 !!!

    However, I do agree with some of the 'preparedness' tenets ... such as hoarding 'critical' goods from yeast to spices to antibiotics to guns / ammo to synthetic motor oil, which will all quickly become unavailable if and when any systemic failure were to start occuring. I also just bought a second Honda generator and 1000 lbs of propane storage tanks ( my older Honda generator burns gasoline ) ... but that's mostly due to the unreliable local power company down here.

    I agree that, if systemic failure actually does ever start to build momentum, 'localized economies' that don't have a major component of gov't involvement or corporate business / finance will be far less disturbed than 'big city economies' that do. This is actually one of the major advantages of living way south of the border. Local food sources are plentiful. Energy requirements are minimal ( i.e. nobody down here could freeze to death if they tried ). And a mindset already exists that most residents down here way south of the border are already very well armed, thus creating a major risk factor for any would-be local robber / assailant. I compare that back to my former residence in New York, where local food sources were all but non-existant, where energy requirements were a major issue during the winter, where almost no 'average citizens' were armed, and where would-be robbers / assailants were almost assured of impugnity if their own stupidity did not 'betray' their actions. THAT enviroment could get very ugly very quickly once the semi trucks carrying food and fuel stop rolling across the bridges.

    Anyway, back to the point, down here way south of the border there is actually a sizeable ex-pat community ... who are very supportive of each other.

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    Default Re: weekend commentary - The Rebirth of Barter

    We're somewhat blessed that we live in a country that's isolated from what you're going through (Australia). We can disappear to an untouched wilderness (Tasmania) and not have to worry about people invading us (in Tasmania). Our biggest concern is whether we willl sell off all our natural resources before the Asian "forces" come and take them anyway (although we are currently being paid for them). Peak Oil is the real issue.
    3 billion people on this planet are addicted to oil, and cannot live within their means, the remaining 4 billion live, below their menas bcause we refuse to give up our lifestyles to help them or even up the disparate living conditions.
    {My husband Alex speaking}
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    Quote Originally Posted by Kirakonstantin View Post
    More fear-mongering? Really? Yes, this is not the 1990's anymore. Yes, things are changing. Either dance or don't. Freaking out and sowing fear isn't going to help anyone.




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    Default Re: weekend commentary - The Rebirth of Barter

    Quote Originally Posted by Flickdreams View Post
    Ha! Yes! Be careful , you are sounding like a survivalist!

    I see a return to small scale localised economies in the world future.
    I see the opposite, the world becoming more integrated. If you go to any large store, you'll find products from all over the world. If you call your local bank, you may end up speaking to someone in Mumbai, India. Even if you go to the local fast food restaurant drive thru, you may end up giving your order to someone thousands of miles away.

    http://www.nytimes.com/2006/04/11/te...pagewanted=all

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    Default Re: weekend commentary - The Rebirth of Barter

    Quote Originally Posted by Melonie View Post
    ^^^ me too ! But there is an inherent problem with any 'barter' system in today's society. Consider the following ...

    Basic Essential skills
    - vegetable and grain farming
    - animal 'herding'
    - hunting & fishing
    - nurse / midwife / healer
    - pickling / canning / food preservation
    - spinning / sewing
    - woodcutting

    First Tier skills
    - medicine / herbalism
    - carpentry, plumbing, electrical
    - engine and machinery repair
    - gun repair / ammo reloading
    - weaving and leathermaking
    - brewing and winemaking
    - meat processing / butchering
    - grain processing / baking
    - non-wood based fuel / energy

    The point of these very short and incomplete lists is that a barter system only works as long as everyone working under that barter system has something of real and necessary 'value' to offer to others in that same barter system !!! Under a barter system, people whose only 'skill' is manual labor at one end of the spectrum, and people whose 'skills' involve management, finance, 'luxury' services etc. at the other end of the spectrum, really don't have anything of immediate need and immediately important value to offer. The reason that the example barter system works in that small Greek village is that it's membership is limited to that half ( or less ) of the local population who actually have something of 'value' to offer.

    Or put another way, there are just as many village residents whose only 'skills' are either ( surplus ) unskilled manual labor or ( non-essential ) higher level specialties. At present, these people are not included in the village's barter system ... thus these people are essentially dependent on 'outside support' from the gov't ( which is rapidly losing it's ability to borrow / tax sufficient amounts to continue providing that support ) or from some sophisticated business / financial structure ( that is rapidly headed for bankruptcy).

    What happens when people with 'unneeded' and 'non-essential' skills are no longer able to receive that 'outside support' ? Probable answer - they begin to TAKE what they need giving nothing of value in return !

    How can a person with 'unneeded' or 'non-essential' skills exchange something of actual value in a barter system in order to obtain needed essentials ? Probable answer - via a medium of exchange with perceived intrinsic value in and of itself i.e. gold, silver.

    The answer to those two questions is, of course, why gov'ts CANNOT and WILL NOT allow barter systems / black markets to be ( openly ) re-established. Under a barter system / black market, it is impossible to 'tax' value away from the providers of real / essential goods and services in order to transfer that value to those with 'unneeded' skills and 'non-essential' skills.

    The answer to the second question also arguably explains why some people whose specialized skills dependent on the existance of a sophisticated business / financial structure are converting the 'value' they are still able to generate while that system still exists into something of perceived intrinsic value i.e. gold, silver ... in anticipation of the day when that system collapses and colored pieces of paper money will be recognized for the REAL value it actually contains ( i.e. essentially nothing ).
    I'm baffled as to why would a smart person think in such one-dimensional stupidity? I think it is a pathology. There is just one part of the brain simply not working...

    Luddites always want to go back to the cave age, where they think their superior 'survivability' skillls will come in handy (as opposed to the current highly abstract/digitized/virtual world which is rapidly hurtling towards more virtualization/abstraction/digitization)

    yes, the zerohedgers firmly belong to the cave age (and they pine and crave for it). They also support Ron Paul (who is determined to turn the clock back at least 100 years) to take them there.

    Unfortunately, the natural state is singularity and the world is rapidly going in the opposite direction of what the luddites (barters) want(and the good ol USA is leading the way).

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    Default Re: weekend commentary - The Rebirth of Barter

    If something doesn't go wrong..... And something always goes wrong.
    The country has been looted.

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    Default Re: weekend commentary - The Rebirth of Barter

    Circling back to the original story, something has already 'gone wrong' in Greece. In the minds of the local residents of the Greek village that created this barter system, what's 'gone wrong' is that their gov't is now attempting to impose draconian taxes on virtually every aspect of their lives. How draconian ?


    (snip)"While Greece has had its fair-share of EURs funneled to it and through it over the course of the last year or two, it appears they have now created their first 'internal' bailout as things go from bad to worse. As Athens News reports, Greece will provide EUR250mm in emergency funds to its ailing electricity providers to prevent a California-style energy crisis. This liquidity injection to the country's power utlities was yet another unintended consequence of government intervention action. An increasing number of consumers stopped paying their electricity bills following the TROIKA's Greek government's infliction of EUR1.7bn property taxation via the electricity providers. The main power utility PPC had a liquidity hole blown through it as non-payments mounted and while regulators claimed the system needed at least EUR350mm to stay afloat, the government has agreed to allow PPC to hold EUR250mm of the property tax it has collected on behalf of the state until June 30 - by which time, it is hoped the utility will have managed to secure other lending facilities. Quite an incredible move - to force the electricity provider to gather the property taxes - and while this attempt clearly failed we suspect the next move will be food-and-water-rationing without proof of tax payment."(snip) from


    (snip)"The Greek government is to begin seizing money from the bank accounts of suspected tax evaders, Finance Minister Filippos Sachinidis told Skai TV on Thursday.

    Sachinidis said that the relevant authorities have been instructed to seize the amount that account holders are suspected of owing to the state.

    The minister said that this would happen before suspected tax evaders go on trial.

    Last week, the Finance Ministry said it would put into use its cross-checking software to monitor transactions and catch more tax cheats.

    Banks, insurance companies and the stock market will have to submit the full details of transactions by taxpayers so that the ministry can draft a property profile for each person and compare it with the tax statement submitted.

    Public and private hospitals to send information about the doctors they employ and their activity.

    Private insurance companies as well as social security funds must supply in electronic form all the statements they issue to their clients or beneficiaries for tax purposes, showing the taxpayers’ payments and contributions, while utilities, including cell phone networks, must supply account data such as total annual bills.

    Credit card companies will also have to submit data on transactions in Greece for cards issued not just in this country but also abroad."(snip) from


    The latter news story brings up a 'poster guy' example of the 'natural state' ( as termed by an earlier post ) ... Greek Doctors. They provide a very specialized service, which is in high demand, and which was made possible by years worth of personal time 'investment' as well as personal monetary investment ( both in tuition and in low starting pay ). They are now being singled out for financial investigation to insure that their incomes can be taxed at draconian rates ... arguably denying them a 'return' on their investment. Arguably, some number of Greek Doctors have already moved their money out of Greek banks ( and Greece itself ). Arguably, some number of Greek Doctors are also contemplating a 'one directional vacation' outside Greece, to avoid a potential situation of being forced into de-facto gov't servitude. That 'natural state' is arguably called freedom !!!

    Also, as introduced by an earlier post, and along similar lines to Greek Doctors, the functioning of today's 'globalized' economy is in fact dependent on a relatively small percentage of people with relatively specialized 'essential' skills. Future viability of the Greek Electric Utility is now an issue, as described in the above news story. Will electric generating plant engineers also be forced into a potential situation of de-facto gov't servitude as their employer goes bankrupt while their savings are 'siezed' by the gov't without due process due to 'suspected' tax issues ? Because without the skills and services of electric generating plant engineers, sooner rather than later, those Greek banks, stores, offshore call center access, and drive-thru restaurants will all cease to function.

    The first time I read Ayn Rand's 'Atlas Shrugged' I thought that it was supposed to be a work of fiction !!!
    Last edited by Melonie; 05-01-2012 at 12:46 AM.

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