Barter as a New (Old) Currency?

By Barry Cohen

There has been a lot of chatter on the blogs lately about barter exchanges and how they will be replacing the national currency in this downward spiraling economy.  We hear phrases like “the collapse of the global economy,” or “the banks are failing and taking your money with them,” or “buy gold, it is the only thing that does not lose value.”

Now I am not an economist, nor do I hold an advanced degree in anything having to do with the financial markets. What I am is a business owner with common sense.  And I am here to tell you that barter will NEVER replace the national currency. Barter credits, or as we call them, barter dollars, are meant as a supplement to everyday business. It is a complementary currency that should not be used for more than 10-15% of income.  It is a tool, that if used properly, will help grow a business by attracting more cash customers. And by cash, I mean U.S. dollars.

We can take it one step further to show the idiocy of this idea. Let’s say this country went back to a true barter system – chickens for beads, goats for shoes.  How far do you think the chiropractor will get when he needs a new computer? Or the auto mechanic when he needs groceries? It just can’t work long term. A national, legal tender currency is needed. And that currency, at least here in the USA, is the dollar.

With a separate, smaller currency, like a barter exchange, there is no real regulation of pricing, how much currency gets into the market, lending, or other issues. It is regulation from a widely recognized entity, such as the government, that keeps things in check. What happens when governments fail to regulate their economy? The reaction from other economies forces a change.

This is how barter exchanges form a micro-economy. Barter exchanges not only have members trading with each other, members of different exchanges can often trade with each other. Intra-exchange trading forces barter exchanges to keep each other in check through this micro-economy.

If bartering through small, independent barter exchanges became the new world economy, wouldn’t a barter exchange then become like our government-issued money? Employees would have to be paid in barter. EVERY business would have to accept barter dollars in order for the system to work.

This all leads to some questions – what is a barter exchange and why join one?  And why is now the time to start a barter exchange in your area?

Simple. A barter exchange is a (usually) small group of  local area businesses that want to trade goods and services with each other. The function of the exchange is to serve as a third-party record keeper and issuer of its own currency. A currency that compliments the more popular, accepted everywhere,  government currency.

Businesses barter. They trade their haircuts for massages and they trade tax preparation for legal advice and everything in between. This sort of one-to-one trading can only go so far. Barter exchanges help businesses bring in new business – in the form of business owners who are also consumers. When business is slow, a company in a barter exchange can look to the other members of the exchange to sell their product or service to. When cash is low, a member of a barter exchange can use their barter dollars to buy the goods and services they need. Barter allows a business to conserve cash.

Why is now the best time to start a barter exchange? Because businesses in your area need your help. They need a barter exchange to get the the products and services they need without cash. Businesses need to gain more exposure in the community, something accomplished through a barter exchange.

BCL Soft created the Barter21 platform to make it easy for barter exchange owners, brokers, and members to trade.  Barter21 software is simple to use, intuitive and secure. It keeps track of all the barter transactions, has a real time member directory, a click-and-buy Trading Floor,  and provides accurate information to members and exchange owners.

With Barter21, barter happens.