Something interesting is happening in Greece, according to the folks at the Daily Bell, and it was entirely predictable. It seems that the Greeks in their desperation have, at the local level, abandoned the euro as the medium of exchange for barter, and, more importantly, alternative currencies. Indeed, I have blogged on this site previously about alternative currencies as a mechanism for avoiding the central bank private money monopolies. But there is a catch in the case of the Greeks, and The Daily Bell points it out:
The Bell is correct here. There has been some discussion in various places about the use of alternative virtual currencies, i.e., currencies that exist largely in the electronic world of computer networks. We use them, in a certain sense, all the time with debit cards, credit cards, and so on. The catch is, of course, that such things are traceable, and ultimately, as the Bell points out, they are quietly pushed by the powers that be for precisely this reason.
The Bell is also correct in that the powers that be have always pushed a version of economic history that goes something like this: first there was barter, then there were coins, and finally, paper money and electronic money. The subtext here being that barter is for primitives, or for desperate people. The reality is that barter more often than not emerges in sophisticated societies where for whatever reason confidence in media of exchange has broken down. Usually, though not always, this system emerges at a local or regional level.
Where we might part company, however, is with the idea that bullion or coinage represents the universal solution. To be sure, these emerge in cases where confidence has broken down, but again, a moment’s consideration will reveal why, in a modern world, with transaction occurring over vast distances, the physical exchange of bullion as a medium is again restricted to a local or regional level. To be sure, it isn’t nearly as convenient to track… and that poses a problem for the powers that be.
But there is another problem, as the readers of this website well know, and that is, before we entertain philosophical discussions about the wonders of bullion-based money, we would do well to recall how that system led to the creation of those very same “powers that be,” and more importantly in the modern context, just how much bullion actually exists.
Virtual barter, anyone?
See you on the flip side.