Barter

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Russian: Бартер

This word, the “barter” was perhaps the most popular in the first years of the post-communism Russian life. Under conditions of severe or even hyperinflation the domestic barter transactions were very popular if not the most popular transactions in Russia. Indeed, the most simple and, definitely, old of countertrade arrangements is barter which is often regarded as an old-fashioned means of exchange that was superseded because money is far more efficient [1]. After all, in a monetary system an apple grower who needs shoes simply has to find a cobbler. In a pure barter system the apple grower would have to find not just any cobbler but one who happened to want apples at that time. Thus in virtually all civilizations, except the Incas, money came to play an important role.


== Advantages and Disadvantages of Using Barter Arrangements[2] [3]

ADVANTAGES DISADVANTAGES
Subject of Advantages of Using Barter Arrangements Comments on Advantages of Using Barter Arrangements Disadvantages of Using Barter Arrangements Disadvantages of Using Barter Arrangements
  • Barter can help business weather economic storms
  • In terms of financial hardships business can barter their services to get what they want. Barter trade has developed into a sophisticated tool that can sometimes help business increase their efficiency by monetizing their unused capacities and excess inventories. Barter usually replaces money as the method of exchange in times of monetary crisis, such as when currency may either be unstable (e.g. hyperinflation or deflationary).
  • Lack of Double Coincidence of Wants:
  • In order for act of barter to take place, it is necessary that the persons with matching requirements are brought together. If a person A wants what person B has, person B must also want what person A has. This is called the double coincidence of wants, which, as we can see, is very rare to obtain in real life. This difficulty makes barter system very cumbersome, even sometimes impossible, especially in an economy where specialization has taken place; - See more at: http://www.merinews.com/article/the-barter-system-pros-and-cons/15813654.shtml#sthash.JSsL6J4B.dpuf
  • Importer is assured
  • A Letter of Credit .
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References

  1. ↑ Barter – Relevance and Relation to Money: Is barter still relevant in the modern world? // http://projects.exeter.ac.uk/RDavies/arian/barter.html
  2. ↑ Benefits Of Barter Exchange - Land Fortune Commodity Exchange - http://www.landfortune.co.zw/index.php/trading/josh.html
  3. ↑ The barter system: Pros and cons - MeriNews - http://www.merinews.com/article/the-barter-system-pros-and-cons/15813654.shtml
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