In a recent editorial on seekalpha.com, columnist, financial expert, and investment advisor Mark Sunshine rebuffs the notion that the national government should let a bank run occur and the markets adjust without government interaction. His assumption is that the world would fall in to chaos and everyone would have to revert back to the primitive barter system we all used before currency was a widespread phenomenon that it is now.
Just as nuclear contamination lasts a long time, uncontrolled bank panics kill economic activity for decades. Without banks, money doesn’t work as a means for commerce and exchange and barter takes over as the primary mechanism for commerce. Just try to imagine going to the grocery store and bartering for food, bartering for shelter or bartering for police protection. What would you offer to the local supermarket in exchange for food? In today’s economy, which is based upon specialization and service, how many of us makes anything that we can barter to survive? If a bank panic goes critical we may have to learn to live in a world without ATMs, credit cards and checks. And try to imagine a world without enough money currency to go around. The destruction of modern U.S. society and the American way of life is one of the possible side effects of an uncontrolled melt down of the financial system.
As a former barter exchange owner and a self proclaimed fan-boy of the barter industry, I respectfully disagree with Mark’s apocalyptic assumption. In a moneyless society, community currencies like those that are currently being used in places like India and Zimbabwe would become the standard operating proceedure. Surely a community barter system could be up and running within a couple of days, and communities could continue to operate, at a small disadvantage, for decades to come. Any good barter broker could put together a system of keeping track of transactions, of making loans, of marketing the businesses that participate and quickly have a community humming on a fresh and fairly stable currency.
Mark Sunshine, we disagree. Barter is better.
