Updated 11/22/2012. Yesterday, I posted this article before it was finished.
In survival preparation, I often read about the use of bartering. This article will talk about how I believe you should not rely on barter. And you should lean towards relying on other means of survival preparations.
First, let me say that I am a big fan of barter. Two people meet, exchange goods of equal value, but neither party walks away with a monetary profit, and both parties are satisfied with the results. This is a very straight forward approach to a barter transaction. This has been a form of commerce well before the existence of currency, and remains in useful today in countless situations. You have too much wheat and your neighbor has livestock to spare, let’s exchange in order that both parties benefit.
In terms of survival preparations, it is my belief that barter is overrated. Here is my rationale:
- Barter assumes that you have goods to spare. Or you are producing excess goods that you cannot consume yourself. In order to have spare or excess goods, you will need to be very well provisioned. My believe is the forthcoming next Great Depression will be a slow-roll economic downturn until when both inflation and unemployment peak past 20%. The slow-roll will take years to evolve. I expect the federal government and federal reserve to use every last measure of resource, until the point that there is simply nothing remaining to throw at the problem. Likely, you will use every bit of spare goods and resources to survive, then run out of resources within just a year or two after the collapse. As the first Great Depression had a 12 year duration, so likely will the next Great Depression last for 10+ years. Two years into the next Great Depression, it is easy to conceived that you will run out of any reserves.
- While I recommend that you allocate a portion of your saving into gold and silver coins, it will be difficult to spend gold and silver during the first couple years after an economic collapse. There is a common saying among survival preppers, “You cannot eat gold”. Or silver. If the economic spirals down to a point of collapse in the United States, I would expect the entire world will accompany the United States. During the initial phases of the next Great Depression, there will a huge de-inflation of assets. Assets will fall in value, just as occurred in the first Great Depression, when money simply stops circulating. The Real Estate price collapse of 2008/2009 resulted in a de-inflationary, de-leveraging period. The US Federal Reserve and the Central Banks of the world responded to the 2008/2009 collapse by monitizing further debt and increasing the money supply. The increased money supply in 2009, 2010, and 2012 was an intentional action to offset asset price decreases by inflating the money supply. To provide direct benefits to the millions of unemployed, prop up state governments, and fill the growing US annual budget deficit, the federal debt increased by $5 trillion during President Obama’s first 4 years in office. The run up the next Great Depression will see inflation spiralling out of control. When interest rates are forced to rise, then BOOM! Stagflation becomes rip-roaring through the world’s economics. This is a long explanation to justify my believe that gold and silver prices will initially collapse along with the economy. So for sake of example, you are holding $50,000 worth of gold and silver coins today, November 21, 2012. In November 21, 2017, that same amount of gold and silver coins may become only worth $5,000, or perhaps even less. If you thought you would become relatively rich from gold and silver during the economic collapse, perhaps you will be rich in relative terms, when no one has any remaining money. But in absolute terms, you will have the same buying power from the same amount of gold and silver. Regardless, you will be in better shape than anyone without gold and silver. But who will you trade with? If your friends, neighbors, and community are without resources, without food, without goods to barter, your gold and silver have little use. No one will trade their last can of beans or last bottle of baby formula for an ounce of silver or even an ounce of gold.
- I agree with James Rawles assessment of the next Great Depression, much depends if the electrical grid stays up or goes down. If the electrical grid goes down, then there will be a full fledge period of Without-Rule-of-Law (WROL) and anarchy. In a grid down situations, it is easy to conceived that there will be mass riots, looting, shootings, and starvation. People will freeze and starve to death. During the first two years of this situation, it will be too risky to conduct normal commerce. Any transaction you conduct identifies you as a person with excess and desirable resources. If you attempt to barter with your neighbors during a multi-year WROL period, your neighbor Bob will tell his 2nd cousin Louie that you have extra stuff. Louie, being on the edge of starvation, will gather his boys to invade your home. One molotov cocktail chases your family into refugee status. It will be essential during the first two years of a grid-down economic collapse to keep your head down, stay isolated, and hunker down with your family. It will be too risky to let your children go to school. Would you exchange all your stored food for a kidnapped child? I would. Even if you live in a rural isolated area, it will be risky to work your fields and garden. You are a sitting duck to anyone with a basic hunting rifle. At least during the first year of the full WROL economic collapse, you should be prepared to live off of your long-term stored food. As horrible as it might sound, wait until after the mass die off to plant your garden. For this reason, store lots and lots of diverse garden seeds. And added to and rotate your garden seeds every year.
- Each and every barter situation will be a risky transaction. Even if you trust your bartering partner, the mere act of bartering will identify you as a person with resources. Criminals and desperate people will be looking for the slightest indication that you have valuable resources. If you exchange your extra guns and ammo, will that same ammo come firing back at you? What I recommend, barter through a trusted third-party.
- In order to barter, you must leave the safety of your retreat location. Again, during the 1st year after the collapse, you will need to hunker down and devote a high proportion of your day to security watches. Any travel will make you susceptible to ambushes and highway robbery.
- Expect organized gangs to use barter situations as a front to gather intelligence about you. “What other things to you have to barter?” “Where did you get these goods?” “How much more do you have?” Opsec can easily be compromised.
- Bartering is time consuming. You might need to talk with 100 people before you find the exact item you are looking for.
- Barter through a third-party. After the economic collapse, there will be traveling salespeople who make their living as a facilitator of barter. Forming a trusted relationship with third-party to conduct your bartering. This is allows you to staying in the comfort and security of your retreat location. And you need not devote countless hours to searching.
- Your survival preparations should include storing enough food, ammo, and medicine, such that you are not forced to barter for essential items. Hopefully any barter you conduct should be focused on adding extras, and not essentials. If you are in a situation where you must barter for essential items, such as food, you will be in a bad, bad situation. You will have put yourself in a bad negotiation position.
- Form your barter partnerships well in advance. For example, while you might have a garden with a variety of vegetables, you might not have sufficient land to raise beef cattle. So perhaps you form a long-term barter partnership with the rancher living just a few miles away from you. You will trade him potatoes in exchange for beef jerky.
- Join a barter club. Today in Argentina, Greece, and Spain, people join a barter exchange program. These countries have already entered their next Great Depression. Many people in these countries are unemployed and their aid from government is decreasing. Families have little money in these countries. In a barter program, goods and services are provided to accumulate barter points. The barter points are then used to exchange goods and services with other people. Perhaps you are good at knitting. You have knitted three sweaters and 5 pairs of socks. You submit these knitted goods to the barter program to accumulate 50 barter points. Then you use the 50 barter points to obtain bread and milk. A barter club will typically pre-qualify the members and have some type of governance process to deal with cheaters. This type of program only works in a grid-up economic collapse. If the electrical grid goes down, a barter club will dissolve.
- Start or join a barter club in your location community. Or network with your neighbors for barter transactions. Many moms of young children unknowingly form barter relationships by sharing baby clothes and baby toys. Babies grow so very fast in their first two years. You’ll find that the baby needs bigger clothes every 3 months. Yet baby clothes can last for years. So instead of buying all the baby clothes new, hand-me-downs are just fine. Here are some examples. These do not have my endorsement, just examples:
- Avoid bartering guns and ammo. Although I have spare guns and ammo, I am unlikely to exchange in a barter situation. Rather, I am saving my spares to give to family members and for my liberal friends who suddenly realized that self-defense begins at home. (During World War II, six million Swiss had guns and six million Jews did not.) I’d rather not have my own guns and ammo pointed back at me. Even neighors whom I trust, when they are in a starvation situation, people will do anything to feed themselves and their children.
- Keep Operational Security (Opsec) at all times. Never tell anyone, even close friends, how much stuff you have stored. Only your spouse and your survival group should know about how must stuff you have stored. You want your home to appear hungry and devoid of desirable goods, so that you do appear as a poor target. Just appearing as a well feed person or having cooking fires will draw attention to yourself. In my suburban neighborhood, I appear as the most boring and least likely person to have lots of stored food, water, medicines, fuel, guns and ammo.
- Expect gangs and criminals to appear as everyday people. Most criminals look ordinary and suddenly use the element of surprise on their victims. The UPS or FedEx delivery person might be a criminal in a stolen uniform. The utility crew may be providing intel to home invasion gang. The guy who audits your water or electric meter is looking how to easily break into your home while you sleep. After the economic collapse, don’t permit any trespassers on your property, avoid deliveries, and instruct deliveries to be left at the edge of the property.
All I am saying here is be careful. Do not put all your eggs in one basket. Barter should not be your first mechanism to obtain critical and essential items. If you have lots of gold, silver, and ammo, but no food storage, then you will be forced into risky situations. Your survival preparations should be balanced and focused on essentials. Most people have not properly stored enough of the essentials. Until you have 1 to 3 years of stored food, lots of garden seeds, sufficient guns and ammo for your entire extended group, alternative means to heat your home in the winter, and year-round access to clean water, then buying gold and silver should be deferred. Do you have sufficient tools for gardening? Do you have a full camping kit for a last resort bug-out? Do you have stored antibiotics and other medicines that your family might need? I love gold and silver coins, but that is not my priority. Be prepared to eat from your own stored foods for several years. Then and only then, barter can be a tool for gaining extras. Get your beans, bullets, and band-aids squared away first. In a grid-up collapse, barter will be come an important economic tool. In a grid-down collapse, it will take several years before there is sufficient stability to allow for bartering. Thus, bartering should not be relied upon for essential items.
Happy Thanksgiving to all in the United States. We are blessed with a wonderful place to live.