Thursday, March 22, 2012

Greece, Barter and Gold

A friend passed on a thought provoking article about the current situation in Greece.

It describes how a barter economy is beginning to thrive there and how the government is actually providing incentives for this to occur (for now).

The Guardian article is entitled "Greece on the breadline: cashless currency takes off. A determination to 'move beyond anger to creativity' is driving a strong barter economy in some places."

Here's an example. "In recent weeks, Theodoros Mavridis has bought fresh eggs, fruit, olives, olive oil, jam, and soap. He has also had some legal advice, and enjoyed the services of an accountant to help fill in his tax return.

None of it has cost him a euro, because he had previously done a spot of electrical work – repairing a TV, sorting out a dodgy light. In return for his expert labour, Mavridis received a number of Local Alternative Units (known as tems in Greek) in his online network account. In return for the eggs, olive oil, tax advice and the rest, he transferred tems into other people's accounts.

"It's an easier, more direct way of exchanging goods and services," said Bernhardt Koppold, an active member of the network. "It's also a way of showing practical solidarity – of building relationships."

Isn't it incredible the way people 'find a way'. OK, so barter isn't new. But people will organise themselves in orderly ways in order to survive. Greece (and to some extent Iceland) have shown the rest of us that we do not actually need the current system in order to survive or to increase our living standards.

Sure, we may not receive the 'things' we are used to buying from our consumer debt binges. But, as Greece is learning, there are positive side-effects to leaving the consumer rat-race. For example, social networks may be stronger.

Moreover, life may be more creative, we may use our skills better. This may help us individually. Rather than using our time in a limited way to earn income for ourselves, and to be 'held back' from progressing by self-serving employers, we would have more freedom to use our skills to better serve our social network.

So how would gold and silver function in this situation? Probably quite well as a medium of exchange. Very useful indeed. But remember, Greece isn't in 'tin-hat' territory yet. Euros are still acceptable. The situation there seems more about survival with no savings to help and no jobs for earnings, rather than a break down in the monetary system.

Nevertheless, the Greeks are at a stage where they cannot earn money through employment, so need to barter their skills in order to maintain basic needs. If ever there did come a day when the fiat money system died, and you had small tradable pices of gold and silver (especially silver) as your savings, then not only would you be in the box seat to trade, but in the box seat to take advantage of assets at acceptabe values.

Gold in New Zealand dollars: $2023.67 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $39.45 per oz
Previous all-time high: $59.19
per oz (30 Apr, 2011)

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