Dear Friends:
Money (currency) is only good as a medium of exchange or a store of value if it is sufficiently acceptable to the providers of good and services. If the faith (or the perceived stability and strength) in a currency wavers, the currency is devalued, loses its liquidity, its acceptability and other key trading and savings attributes. As a rational businessperson, you lose your desire to accept money as a medium of exchange, and you no longer wish to keep a large percentage of your asset value or net worth invested in currency. This is worth looking at from a financial planning perspective.
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I would urge you to click on http://theglobalfuturist.blogspot.com/ for some serious insight into what is in store for the world economy during the next few years. Then come back here (y'all).
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Many international traders (e.g., importers and exporters) are going to be diversifying the types of currencies which they accept in payment for their products and services. Many will likely begin to gear their pricing to the price (per Platt's or some other source) per barrel or per gallon of oil. Others may choose to be paid in oil-backed and oil-denominated certificates of one form or another. This notion is not as far-fetched as it might sound at first -- gold and gold certificates have been a source of payment and a store of value for many years.
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The notion of barter (bilateral or triangular) is an enticing one...at very least, it assures each party of what they are receiving in terms of the actual value of the goods, because utility, and not re-sale price, or translation into stores of currency, governs value.
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This type of arrangement can work most efficiently between direct production-related or situationally non-competitive parties (e.g., where no re-sale is involved), such as 1) sellers exchanging overstocked items with eachother; 2) OEMs and their components vendors, and others.
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The accounting, taxation and tarrif issues could become quite complex, but where there is a capitalistic motive, there is invariably a creative "fix".
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Please feel free to share your thoughts on barter with me either here or at douglas.castle@yahoo.com. >>>>>>>This is a conversational thread worth pursuing.
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Additionally, I believe that with money eliminated as an interim store of value, business enterprises will have an increased propensity to merge and to consolidate. Money is a convenience in facilitating exchanges, but it also inhibits the formation of closer relationships just as it obscures the intrinsic value of goods and services.
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Faithfully,
Douglas Castle,
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Internationalist
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