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Thursday, March 16, 2017

Using Barter & the Black Market to Thrive

Poor Man Survival

Self Reliance tools for independent minded people…

ISSN 2161-5543

A Digest of Urban Survival Resources


In a prolonged crisis — especially one where the very fabric of society starts to unravel — money as we know it will likely lose all value. But then how will you be able to purchase goods and services? Well, if that happens, it’s back to the good ol’ barter system.

Which begs the question, what types of items make good barter?

There are some pretty obvious things on this list from The Survivalist Blog — ammo, for example — but there are also a few other items you might not occur to you as particularly valuable. Until the stuff hits the fan, that is.

So take notes and perhaps add a few of these miscellaneous goods to your emergency storage. You never know when they may come in handy.

Many people don’t know this. It wasn’t long ago when Americans were forced to use cardboard, wood, leather, clam shells and even fish skin as currency.

During the 1930’s, as a substitute for government-issued money, Americans turned to local currencies to continue trade -- what they called “scrips.”

So popular were these scrips (numbering in the hundreds, probably even thousands), the U.S. government even considered issuing its own national scrip -- a parallel currency to the Federal Reserve Note. Secretary of the Treasury, William H. Woodin, none too keen on the idea, shut down the conversation.

Rather, he ordered the U.S. Bureau of Engraving and Printing to… wait for it… print more Fed notes. (Surprise.)

As we move through our era’s Depression, history is rhyming in interesting ways.

Our rise of the Sharing Economy, for example, isn’t anything new. For obvious reasons, it surged in popularity during the Great Depression. Our school’s history textbooks largely ignore this, but Americans did more than just tighten their belts and wait out the storm. They mostly came together. 

According to Thomas H. Greco Jr. in his book New Money For Healthy Economies, “people began to establish mutual support structures, like workers’ cooperatives, many of which would recycle and repair donated or broken items. People learned to share what they had, and to by-pass the market and financial systems. Most of these measures were considered stop-gaps to be utilized until things ‘got back to normal,’ but in some of them there seemed to be the promise of more permanent improvements. One of these ‘stop-gaps,’ which was intended to address the problem of the dearth of currency in circulation, was the issuance of ‘scrip.’”

Today, along these lines, we have Uber, Airbnb, Craigslist, Couchsurfing, eBay, Upcycling and much more. All of these have created an efficient peer-to-peer marketplace to offset much of what has been lost in the old economy.

Couple that with the rise of today’s form of “scrip” (see: cryptocurrencies) and you’ve got yourself a mirror image of what happened during the Great Depression -- and many great currency crises of history.

“History,” Greco Jr. goes on, “is full of examples of successful local initiatives aimed at providing exchange media, but the Great Depression of the 1930's saw this done on an unprecedented scale. There were literally hundreds of scrip issues that were put into circulation by a variety of agencies, including state governments, municipalities, school districts, clearing house associations, manufacturers, merchants, chambers of commerce, business associations, local relief committees, cooperatives, and even individuals. These issues went by different names, depending on who issued them and the circumstances of their issuance. Common scrip types were certificates of indebtedness, tax anticipation notes, payroll warrants, trade scrip, clearing house certificates, credit vouchers, moratorium certificates, and merchandise bonds.”

When most people hear the term “black market,” they immediately get visions of guys with guns moving heroin across State borders. But that’s only part of the dealings which happen outside of the purview of the State.

They also think that the government needs to “do more” in order to crack down on these types of illicit activities. Reality is, though, it’s often government action which puts the incentives in place for these activities to thrive. The government usually creates so-called 'Black Markets' in the first place, often fueling smuggling operations.  This has happened with alcohol, drugs and now with tobacco and terrorists have capitalized on such profits to fuel their enterprises.  In other words, government greed and stupidity creates mayhem in the first place! 

What we don’t talk much about his how black markets -- like the ones which popped up during the Great Depression -- save lives where central planners fall short. The more peaceful, voluntary activity constricted by the State, the more individuals find clever ways to sidestep the State’s arbitrary walls to feed their families.

Fortunately, today’s Sharing Economy is dynamic and efficient as ever. And decentralized, anonymous and censorship-resistant alternatives to Uber, Airbnb, eBay and the like are being built right under our feet.

How the Black Market is Saving Two Countries From Their Governments

Shaun Bradley

Ever since governments began banning and licensing different parts of the economy, the black market has made sure people still have access to the things they need. Unstable governments always turn on their own citizens using price controls, heavy taxes, and even the threat of imprisonment to prop up their failing systems. As conditions inevitably deteriorate, as they have in Venezuela and Greece, the underground economy becomes invaluable to those living through the crisis.

Markets Survive in Venezuela

The shadow economy refers to more than just the trade of illegal goods. A grey market, for example, provides legal products distributed through illegal channels. Since basic things like toilet paper, medicine, and even food have disappeared from store shelves in Venezuela, the peer-to-peer network has become the only reliable way to secure life’s necessities. In desperate situations like this, the existence of independent merchants can mean the difference between life and death

Even the value of Venezuela’s currency has started to move away from the government’s control. At one point, the official exchange rate was fraudulently set at 10 bolivars per U.S. dollar, while on the black market it was trading at 1,000 to one. This action hurt millions by suppressing wages across the country and eroding any remaining trust. Inflation has quickly become the most imminent threat to the Venezuelan people, stealing the value of their labor and savings. For years, the bolivar has experienced hyperinflation, increasing the cost of living almost exponentially.

The State’s desperate response was to institute price controls, but that has only led to shortages across the board. Luckily, the unregulated markets have been able to determine the true value of goods and provide vital support for the struggling communities. Many people think that so-called price gouging is unethical, but isn’t it better to buy what you need at twice the price than to not be able to get it at all?

Black Markets Amid Greek Fiscal Mayhem

Greece is going through a transformation of its own -- but in response to a very different set of circumstances. The Greek people have endured a series of tax increases and pension cuts over the past several years to fund debts owed to the European Union. These austerity measures have created a dire situation for those trying to secure their financial independence. The result has been widespread tax evasion, which has helped grow Greece’s underground economy to nearly 25% of the country’s GDP.

Surprisingly, it’s not only the poor who are utilizing the shadow economy in Greece, but also the professional class. Those earning large amounts of money are subjected to extremely high tax rates, driving many business owners and entrepreneurs to either seek better opportunities abroad or take steps to conceal their income.

By persecuting the most successful members of society and not allowing them to keep what they earn, authorities are only encouraging disregard for the law. Without the grey market in Greece, many more skilled workers would have already left the country. Even though the black market is consistently blamed for taking away tax revenues, it ironically may be the only thing keeping the debt crisis from spiraling even further out of control.

Scarcity and the Consolidation of Power

Scarcity is more than just a mindset; it’s a harsh reality that people born in developed nations rarely see firsthand. But any time a bankrupt government seizes control over their citizens’ lives and the economy, the end result is always despotism. The consolidation of power into the hands of a few is rationalized during chaotic times but ultimately puts the rights of all citizens at risk.

Just last year, Venezuelan law enforcement carried out raids that killed 245 people. There was no accountability regarding whether the shootings were justified, but reports claim that many of the victims posed no threat and some were even killed after being taken into custody. Such violent crackdowns are the inevitable result of governments attempting to maintain control amid the chaos of broken economic systems.

In 2011, Robert Neuwirth wrote a report for Foreign Policy that highlighted the importance of this untaxed, unlicensed, and unregulated global marketplace. He called it “System D.”

“They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes are part of ‘l’economie de la d├ębrouillardise.’ (Literally 'Economy of Resourcefulness') or, for street use, ‘Systeme D.’ This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy.”

The nanny state has done an excellent job attacking anything outside of the government’s jurisdiction, but a lack of regulation is what allows for the most rapid growth and productivity. Legislators notoriously overestimate their influence on the millions of people they attempt to rule over, but ultimately, grassroots decisions made by individuals have the greatest impact. People who rely on their own skills and reputation rather than a bureaucratic stamp of approval are labeled criminals, but they’re the ones providing real value to society in many cases.

Our Black Market Future

Merchants in these off-grid markets are often associated with danger and violence, but in reality, they provide the purest form of voluntary transactions.

Negative aspects, like organized crime, are only made possible because of the profits created as a result of prohibition. Without the State intimidating the public at gunpoint, there would be no incentive for people to seek out the services of nefarious organizations.

These organic free markets are only strengthened with the circulation of assets like cash, bitcoin, and precious metals. Anonymity mixed with technology is empowering people in ways never imagined. The adoption of cryptocurrencies is bringing the shadow economy into the digital age and expanding its reach internationally. This new economic system represents a very real threat to the current financial and political structures.

However, innovators in this environment have to be careful, and after the Silk Road was taken down, real legal implications became apparent. Most famously, Silk Road co-founder Ross Ulbricht was sentenced to life in prison and targeted specifically for challenging the existing system.

The growing progression towards decentralization he attempted to catalyze is on a direct collision course with the central banks and their war on cash. As the public’s faith in fiat money continues to wane, there will be more and more opportunities to show the benefits that come from peer-to-peer networks over central planning. Those who recognize the inherent extortion of the old system have to lead by example and educate others, regardless of which tactics of intimidation are deployed against them.

[Ed. note: This article originally appeared on FEE’s website at this link.]

Escaping the Rat Race with Your Own Business-CD ROM



Yours for another revolution,

Bruce ‘the Poor Man’


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DAR said...

Very interesting post and made me put my thinking hat on!

MaryAnne said...

With the way Dems are fighting to screw up the current administration and how they've taxed and spent our way into financial ruin [Obama, when he wasn't spending millions of tax dollars on vacations, gutted our nation with job killing regulation and put us into record setting debt]...I fear we may be forced into this kind of lifestyle sooner than we think.