How to stop worrying (about the bank) and start bartering

From How Bartering Works

Trading goods and services without the use of money is called bartering. Early civilizations relied on this kind of exchange. Even cultures in modern society rely on it. Think of people in prison who commonly trade cigarettes for protection or extra food. For the most part, they don't have cash. So, like people in pre-currency economies, they work with what they have.

But, since the advent of money-based systems, bartering is an option that most of us dismiss as soon as we get that first paycheck or allowance. Not so for a guy named Kyle MacDonald. He drew a media frenzy when, in a matter of one year and 14 trades, he bartered his way from a paper clip to a house [source: NPR]. Although he had a lot of help from his local government and some people in show business, his story offers dramatic evidence of today's existing market for bartering. MacDonald is one of many people who have taken advantage of the growing phenomenon of bartering over the Internet. This ancient practice is also alive and well in services that facilitate bartering and companies that swap favors.

In the next few pages, we'll take a look at the process of bartering, including whether it can work as a practical protection against inflation, and whether you can use it to avoid taxes.

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Bartering Lines

music by Ryan Adams


From Millionaire's Crisis Plan: Return to Bartering

After spending four years in a wooden hut in a forest outside Moscow, Sterligov has leased out almost an entire floor atop a skyscraper in the Moskva-City business district to launch a global barter system.

Sterligov, who doesn't watch television and rarely uses the Internet because of his Orthodox religious principles, plans to start facilitating the barter of debt and goods with his company, the Anti-Crisis Settlement and Accounting Center, by early March.

While the global economic crisis didn't sweep into Russia until September, Sterligov said he sensed that trouble was looming in August and got to work.

"I decided that barter trade would be the right choice for the world in times of liquidity problems and payment delays," he said in a recent interview.

So from August to November, computer programmers hired by Sterligov created an interactive database allowing the barter of debt and goods worldwide.

Sterligov illustrated a possible barter deal with a real-life example: Magnitogorsk Iron & Steel Works' estimated debt of 1 billion rubles ($30.4 million) to Mechel for coal supplies.

"Mechel could put information about MMK's nonpayment in our system and then add which products it needs itself," Sterligov said.

MMK, in turn, would put 1 billion rubles of steel into the system, he said. At some point, a company would surface that wanted steel and had a product needed by Mechel, and the deal would be completed.

"For this to work, you have to have thousands of bids in the system," Sterligov said, adding that debt would probably become the most popular item for barter.

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From Bayer barters to grease wheels of trade in Brazil

SAO PAULO, April 2 (Reuters) - Germany's Bayer AG (BAYG.DE) is accepting coffee, sugar and grains as payment for its agrochemicals and inputs as a way to stave off a slowdown in sales as farmers struggle to obtain bank loans to raise cash.

"It's a good way (of doing business), especially in these times of volatility and uncertainty," said Marc Reichardt, head of Bayer CropScience in Latin America.

Bartering is already a common practice for farmers during the planting season, easing the burden of the many investments they have to make at that time, but it is usually done only with trading houses dealing in the product the farmer grows.

Trading houses which use this system provide farmers with inputs like fertilizer, and farmers repay with physical product later in the season.

Brazilian farmers, particularly those who have some existing debts, have reported problems in accessing credit for planting.

Bayer will offer bartering to soy, corn, cotton and coffee farmers. It will then export the product it receives through a trading house, Reichardt said during a press conference about the company's 2008 earnings.

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From The Great Unraveling: Global Economy Begins to Fracture as Leading Powers Pursue National Agendas

Venezuela is promoting the “Bolivarian Alternative for the Americas” (in opposition to the neoliberal Free Trade Area of the Americas) as a regional economic pact based on “cooperation and solidarity,” and which encompasses related agreements on energy, finance and media. It’s mostly been limited to technical cooperation, subsidized oil supplies and barter agreements, particularly in healthcare, which have proven effective and popular, but are a long way from creating a regional economy.

EMPIRE STRIKES BACK

Washington may look to Latin America as an outlet for capital expansion, such as with the Plan Puebla Panama, which has been in the works for a decade. Public funds and money from international institutions would be used to create an export-oriented industrial zone from southern Mexico through all of Central America.

These types of projects provide a “spatial fix” for capitalism by reorganizing new spaces that serve as sites where surplus capital (and labor) can be deployed as a way to alleviate crises of overproduction.

More ominously, Washington may seek to renew its imperial project in Latin America. Greg Grandin writes in Empire’s Workshop that the United States used Latin America historically as a “staging ground” for the “early push towards empire,” then as a school to study how to “execute imperial violence through proxies,” and most recently as a site for a resurgent “nationalist militarism” that began with the Central America wars of the Reagan presidency and culminated in the post-Sept. 11 wars.

Thus, given a declining economy and the need for domestic capital to find new markets, the United States may be tempted to use the Pentagon to launch adventurist wars in Latin America as a solution to its economic woes.

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From Short on cash? Bartering making a comeback

Bartering -- the trading of goods or services without using cash -- is making a comeback in a troubled economy. It can be as simple as trading baby-sitting with another family, or as complex as an exchange with strangers facilitated by one of the several Web sites that have sprung up to connect barterers.

Bartering ads on Craigslist have increased about 100 percent since last year, said Susan MacTavish Best, a spokeswoman for the online classified advertising service. Traffic is also up at local organizations like the Midwest Barter Exchange, a Kalamazoo, Mich.-based outfit that acts as a go-between for about 1,000 business clients.

"Before, we were out beating the bushes trying to get people to join, and now they're calling us," said Lance Dorsey, a customer service representative for the exchange.

Boise beautician Heather Wood has traded haircuts and pedicures for years of day care, kids' clothes, a paint job for her car, an oil change, a set of professional portraits for her family and dental cleaning.

"It's fun, and it builds a whole different kind of a relationship," said Wood, who has five children. "They're getting what they want and I'm getting what I want. I would much rather do that than make cash most of the time."

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Smoke Signals - Barter

scene in which Thomas tells a story in exchange for a ride


From North Idaho man may be King of Bartering

Imagine getting anything and everything you want without spending a a single penny. One North Idaho man does just that, Michael Moore has mastered the lost art of the barter.

We did a few stories about bartering a couple of weeks ago...Its becoming a lot more popular in this economy...And we talked to a few people who dabbled in it...They've made a few trades...

But each of them sent us to one coeur d'alene man who has bartered hundreds maybe thousands of times...

Moore, a Coeur d'Alene man has traded for just about anything you can imagine.

"Basically I'm able to obtain anything I want through bartering," he said.

Literally anything from goats, to trees, to cars.

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From Barter deal: Work on apartment, get free funeral

A New York City funeral director is offering a deal to die for.

Peter Dohanich put an ad on Craigslist seeking a reliable contractor to fix up his apartment in exchange for a full service funeral.

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From Tax tip

Reporting: The rules for reporting barter transactions may vary depending on which form of bartering takes place. Generally, you report this type of business income on Form 1040, Schedule C Profit or Loss from Business, or other business returns such as Form 1065 for Partnerships, Form 1120 for Corporations, or Form 1120-S for Small Business Corporations.

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The New Age Of Bartering

An ancient practice has just received a reboot, as many small business owners have turned to bartering with others in the face of a continuing economic crisis. Jeff Glor reports.


From Barter system gaining buzz in Woodstock

Helene Aptekar got clothing rods installed in her closets. Harriet Kazansky got her house painted. Kristine Flones got someone to look after her cats when she went to India, and Gerry Michael got an heirloom sweater mended.

And it didn't cost them a dime. Instead of paying in money, they paid in time.

They're all part of the Woodstock TimeBank, one of a number of such groups that are springing up nationwide.

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From Recession means business for bartering

A local restaurant paid for $50,000 in renovation construction with gift cards. A Kitsilano winemaking business had its floors cleaned and paid with batches of wine.

A North Vancouver dry-cleaning company barters nearly $50,000 in services per year to get staff incentives such as gift certificates and even dining room sets for employees. Small and medium-sized businesses are cashing in at Vancouver's barter exchanges, and business is booming in the barter industry.

Trade Exchange Canada, a bartering consultant firm that pairs businesses wanting to exchange services and charges a monthly fee to join, has doubled membership in the past six months.

"In 14 years [in the industry] I don't know if I've ever been this busy," said Scott Berg, a managing partner at Trade Exchange. "We've become very relevant." Businesses want to reduce spending during the recession, and trading services is one way to do that.

For many companies, such as restaurants bartering with gift certificates, the cost is much less than the cash worth of the trade, according to Berg.

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Barter is Good for Business!

Check out how companies can benefit from barter. IMS CEO Don Mardak Interviewed by Neil Cavuto.


From Barter Helps Businesses Survive Recession

Many businesses are struggling to survive in this economy. One thing that is helping them make it through is an old idea made new again, bartering.

The old bartering was simple. You traded goods or services for something of comparable value. But, modern bartering uses the internet to connect hundreds of businesses.

Sunset Acres is a charming countryside bed and breakfast. But, the stormy economy has hit home.

"It's really hurt us. It really has," said Brenda Ohrem. "I hate to say it. But, I'm glad everyone is in the same boat as me because I was taking it personally thinking what am I doing wrong?"

Empty bedrooms means Brenda Ohrem is relying more and more on the American Exchange Network.

She collects trade credits when people stay with her and spends it at the business network.

"It's definitely helping us make it through these hard times," Ohrem said.

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From Realtors seek to barter houses against bills, find no takers

NEW DELHI: Caught between a credit squeeze and demand crunch, realty players want to barter houses to settle pending supplier bills, but contractors say they can’t forego hard cash and settle for flats in a falling property market.

At least three major realty brands operating in the national capital region have offered apartments in their ongoing projects to contractors and suppliers of building material, industry insiders told ET. “There are several real estate companies
that are falling behind on payments and asking contractors to settle for apartments instead,” says PR Swarup, director general of Construction Industry Development Council. Swarup refuses to name any company, but ET has learnt the firms taking this route include even listed players.

A Delhi-based realty firm, a prominent name in the sector, is developing a major residential project in the city and has offered apartments to its contractors. “We have made an offer but the contractor is asking for a discount. If we reduce apartment prices, we will also expect the contractor to bring down the bill value for the work he has done on our project,” says a company executive corroborating this.

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