News & Analysis
Barter and Alternative Currencies Growing in Greece
Euros discarded as impoverished Greeks resort to bartering ... Communities set up local currencies and exchange networks in attempt to beat the economic crisis ... It's been a busy day at the market in downtown Volos. Angeliki Ioanitou has sold a decent quantity of olive oil and soap, while her friend Maria has done good business with her fresh pies. But not a single euro has changed hands – none of the customers on this drizzly Saturday morning has bothered carrying money at all. For many, browsing through the racks of second-hand clothes, electrical appliances and homemade jams, the need to survive means money has been usurped. "It's all about exchange and solidarity, helping one another out in these very hard times," enthused Ioanitou, her hair tucked under a floppy felt cap. "You could say a lot of us have dreams of a utopia without the euro." – UK Telegraph
Dominant Social Theme: Desperate measures for desperate Greeks?
Free-Market Analysis: This article posted by the UK Telegraph deals with the emergence of alternative money in a stressed Greek society. What's an alternative dominant social theme? That people will take action, however ineffective, when they have no other options. A subdominant social theme might be "no gold or silver needed."
That's right, the article manages the feat of portraying a society turning to alternative money without ever dwelling on gold or silver ... especially silver. What the article DOES clumsily portray is the emergence of various kinds of alternative monies in lieu of the euro itself.
The feedbacks are at least twice as sophisticated as the article and point out that the reporting is as much about an alternative currency as it is about bartering. Here's some more from the article:
In this bustling port city at the foot of Mount Pelion, in the heart of Greece's most fertile plain, locals have come up with a novel way of dealing with austerity – adopting their own alternative currency, known as the Tem. As the country struggles with its worst crisis in modern times, with Greeks losing up to 40% of their disposable income as a result of policies imposed in exchange for international aid, the system has been a huge success. Organisers say some 1,300 people have signed up to the informal bartering network.
For users such as Ioanitou, the currency – a form of community banking monitored exclusively online – is not only an effective antidote to wage cuts and soaring taxes but the "best kind of shopping therapy". "One Tem is the equivalent of one euro. My oil and soap came to 70 Tem and with that I bought oranges, pies, napkins, cleaning products and Christmas decorations," said the mother-of-five. "I've got 30 Tem left over. For women, who are worst affected by unemployment, and don't have kafeneia [coffeehouses] to go to like men, it's like belonging to a hugely supportive association."
Greece's deepening economic crisis has brought new users. With ever more families plunging into poverty and despair, shops, cafes, factories and businesses have also resorted to the system under which goods and services – everything from yoga sessions to healthcare, babysitting to computer support – are traded in lieu of credits.
"For many it plays a double role of supplementing lost income and creating a protective web at this particularly difficult moment in their lives," says Yiannis Grigoriou, a UK-educated sociologist among the network's founders. "The older generation in this country can still remember when bartering was commonplace. In villages you'd exchange milk and goat's cheese for meat and flour."
Other grassroots initiatives have appeared across Greece. Increasingly bereft of social support, or a welfare state able to meet the needs of a growing number of destitute and hungry, locals have set up similar trading networks in the suburbs of Athens, the island of Corfu, the town of Patras and northern Katerini.
The Telegraph article is not the only mainstream post dealing with these systems. Recently there was a BBC profile of Greek alternative barter/currency systems. Like this Telegraph article, the BBC article mentioned nothing significant about the option of gold and silver.
The articles instead dwell on the impoverishment that would drive people to barter. It is hard to avoid the message that only a dismal societal and personal failure would generate a return to ancient practices such as these. The euro, it is implied, would be the currency of choice for a successful society (i.e., It is a privilege to use the euro.)
The issue of tax reporting is brought into the article – and an insinuation is made that people are dodging taxes by using these systems. But so far as we can tell, such systems need central bookkeeping, which is one reason why we figure the United Nations has been a supporter of them.
We've written a series of articles about UN promotion of such systems. Gold and silver can trade tax-free with proper precautions. We're not recommending tax avoidance, merely pointing out how commerce works. Gold and silver are far harder to track for personal usage than barter/currency systems that use a centralized bookkeeping system.
To learn more about gold, silver and other investment strategies see our Daily Bell Special Report: When It Comes to Macro Market Analysis and Uncovering Profitable Investment Ideas, There Simply Is No One Better Than This Independent Economist and Newsletter Writer.
Are Greeks turning to gold and silver as well, as those in Zimbabwe have done once the economy collapsed? You wouldn't know it from this article but we would bet gold and silver are finding their place alongside such barter/currency systems.
Conclusion: The BBC and Telegraph are just not mentioning it ... Wonder why.
Posted by Bischoff on 01/09/13 09:04 PM
It amazes me that the DB must seek refuge for their stand in your comments.
So far, the DB could only deal with my explanations by retorting with Argumentum ad Hominem, which is the fallacy of attacking the character or circumstances of an individual who is advancing a statement or an argument, instead of trying to disprove the truth of the statement he makes, or the soundness of the argument he advances.
Now, the DB uses your retort to bolster their opposition to my statements. Don't take my response as a personal attack. I am only trying to point out the lack of specificity in your comment, as is common in all general discussion over the nature of money. General discussions always assume that the definition for MONEY is well known and commonly accepted. Yet, should you pose the question, "What is money?" to a hundered people, you are likely to get a hundered different answers. If you are lucky, there will be one answer which can be defended logically, based on the definition of the terms used.
The DB's argument that Silver was MONEY for 10,000 years, therefore it must be MONEY today, is clearly a fallacy of the Post hoc ergo propter hoc type, and therefore can be dismssed.
Now, the DB attaches itself to your sceptical question, and which is, "So, silver is not a commodity with a standard of value, because it is no longer a byproduct of gold mining and produced at a specific ratio relative to gold?" for the purpose of defeating my statement.
So, let's examine the logic of your question.
1. The question makes no distinction between the term VALUE and the term STANDARD OF VALUE.
2. The question implies that each commodity has a STANDARD OF VALUE.
3. The question assumes connections which are not implied by my statement.
When "labor" (work or human exertion) is applied to "land" (natural resources), value accrues to the resultant product or "wealth". (It is very important that the terms land, labor and wealth have concrete definition applied with consistency across the argument.)
The value a good or commodity takes on is ditectly related to the amount of work (human exertion) expended in its production. To measure VALUE, a "measuring devise" is required.
Gold and/or Silver make an "ideal measuring devise" for measuring value, because of their inert physical and chemical characteristics. Either the amount of work required to mine and refine a specific amount of Gold, or the amount of work required to mine and refine a specific amount of Silver can serve as the STANDARD by which to measure the VALUE of any other good or commodity.
However, both Gold and Silver can be a STANDARD OF MEASURE simultaneously, if the amount of work required to mine and refine 'x' amount of Gold to 'y' amount of Silver remains constant. Once it requires more or less work to mine and refine either one of the two metals, the value equivalency is lost, and ONLY, either Gold or Silver can serve as the STANDARD OF VALUE.
ONLY the metal which is the STANDARD OF VALUE is MONEY. All other goods and commodities, including precious metals, gems, etc. are measured in terms of aliquot parts of MONEY.
You then posed the question, "Were bronze coins not easily divisible? Silver appears to be very sought after as money today (commodity with a standard of value)?" So, let's examine the logic if this question as well.
1. The question equates the advantage of the divisibility of silver with the divisibilty of bronze.
2. The term "standard of value" is used synonymously with the term "value"
The question of divisibility of Silver has only relevance to Gold and not to Bronze. Prior to redeemable paper currency, Gold and Silver themselves were used as currency. Because of the difference in density of silver vs. gold, it was easier to deal with silver coins for small transaction then to have tiny little gold coins minted. When both Gold and Silver were MONEY simultaneously, silver coins circulated more freely than did gold coins. Therefore as general currency, silver coins were preferred.
However, once redeemable paper currency achieved widespread acceptance, the greater divisibilty of silver vs. gold for minting coins as currency which also had the status as MONEY lost importance.
The advantage of the divisibility of Bronze only existed for its use as currency. Bronze never rose to the status of MONEY (STANDARD OF VALUE). Therefore, your question dealing with Bronze in this argument isn't relevant.
Your main problem is that you fail to realize the difference between VALUE and a STANDARD OF VALUE. In that confusion, you seem to have found company among the staff of the DB.
Posted by Charlie on 01/09/13 03:37 AM
So silver is not a commodity with a standard of value because it is no longer a byproduct of gold mining and produced at a specific ratio relative to gold? Were bronze coins not easily divisible? Silver appears to be very sought after as money today (commodity with a standard of value).
Reply from The Daily Bell
Thanks, Charlie. Might as well argue with the wind.
Posted by Bischoff on 01/09/13 01:31 AM
DB: "Again, with the idea that silver is not money. It's likely been money for 10,000 years or more. But you want to declare it is not, because for you only gold is money. And silver is just an industrial resource. Denying monetary history does not change it ... "
BISCHOFF: I have no intention of changing monetary history. The DB staff and I have had a go-around over the status of silver as MONEY numerous times before.
While silver may very well have functioned as MONEY for 10,000 years plus, it does not follow that silver must be MONEY today. For the DB to base its argument on the premise that since silver has been money for thousands of years, it therefore must always be MONEY, is simply fallacious. It is a fallacy known in logic as "Post hoc ergo propter hoc".
To understand my argument that silver is no longer MONEY, and that it is extremely unlikely to ever again be MONEY, one has to understand the difference between the terms MONEY and CURRENCY.
MONEY refers to a commodity which serves as a standard of value. CURRENCY refers to anything which serves as a medium of exchange.
Thousands of years ago, as gold was being mined, the bi-product to mining gold invariably turned out to be silver. People were prospecting for gold, and they found silver along with it for the bargain. They found quantities of silver along with quantities of gold at a seemingly constant ratio of 1 : 15.
As precious metal, silver has many of the qualities present with gold, though the amount of work required to mine a certain amount of gold, yielded 15x the amount of silver. As long as prospecting and mining for gold led to also getting 15x the amount of silver, there was an equivalency between the two metals which allowed both to serve simultaneously as the STANDARD OF VALUE, or MONEY.
However, silver turned out to be a far better currency than gold, because of its better divisibility. Better divisibility let silver coins circulate more easily than gold coins. As such, the Spanish silver dollar became the premier currency throughout the North American colonies. The U.S. Congress adopted silver specifications of the Spanish Pillar Dollar as the specification for the newly, congressionally created U.S. Dollar. It set the VALUE of a USD to be equivalent to 1/15 of the amount in gold.
As people started to prospect soly for silver, huge finds of pure silver veins were made, such as the one found with the Comstock Lode in Nevada, which threw the 1 : 15 value equivalent of gold to silver seriously out of kilter. The pure silver finds required much less work to produce specific amounts of silver when compared to mining silver found along side with gold. Consequently, using both metals as currency representing equivalence in value became impossible.
William Jennings Bryan couldn't get this fact through his head. He mounted two highly publicized and emotionally charged races for President in the late 1800s on the platform that the "value equivalent" between the two metals must be kept constant. (Read his "Cross of Gold" speech). The DB's insistance on silver being MONEY is reminiscent of William Jenning Bryan's stubborness to concede the fact that silver could no longer be MONEY simultaneously with gold.
Everybody in the late 1800s wanted to dig for silver, and then exchange it at the banks for gold. The bankers refused.
When the greater and greater use of redeemable paper currency removed the obstacle of poor divisibility associated with gold, while maintaing the value standard of gold, the use of silver as the standard of value, or MONEY vanished. With the Gold Act of 1900, the U.S. officially declared to the world that henceforth it only considered GOLD to be the standard of value.
While silver coins and silver deposit slips (U.S. Silver Certificates) circulated as currency until 1964, only GOLD has been MONEY for the last 113 years. This is unlikely to change, whether we keep the irredeemable, "managed" Federal Reserve currency whose value is set by the U.S. Congress and the FED, or whether we revert to a redeemable currency under the gold standard.
Silver is a far superior metal to gold as an electrical current conductor, and as an all around industrial commodity. Not withstanding the DB's argument that silver was MONEY for 10,000 plus years MONEY, and therefore it must be MONEY today, I maintain that silver will never again return to attain the status of MONEY.
I don't know how I can make myself more clearly understood regarding the subject of silver as MONEY. If I failed to be sufficiently lucid to get the point across in previous explanations, I humbly apologize to the DB.
Posted by taxesbyanyothername on 01/09/13 01:27 AM
The Bible in both Testaments condems usury, as do many other religious texts, and so do I. If you look hard enough you could probably find a thousand different definitions. The council of Nicea forbade lending at interest by the clergy but not by anyone else. No verses there but if you don't like their decisions then, you must be protestant. How many versions of the bible do we have?
The book of Ezekiel is about the destruction of Israel for worshiping gods other than Jehova, not for usury.
Posted by mikef on 01/08/13 10:27 PM
Taxesby, please indicate the old testament verses that have anything but utter contempt for usury.
"The Old Testament "classes the usurer with the shedder of blood, the defiler of his neighbor's wife, the oppressor of the poor, the spoiler by violence, the violator of the pledge, the idolater, and pronounces the woe upon them, that they who commit these iniquities shall surely die." Id. at 2. The usurer was put in the same category with extortioners, Sabbath-breakers, those who vex the fatherless and widows, dishonor parents and accept bribes (Ezekiel 22). Id. at 17. The usurer was also classed with the liar, the unrighteous, the backbiter, the slanderer and perjurer, and denied the right to inherit the New Jerusalem (Psalm 15). Id. The usurer is further classed with the meanest and lowest of men and the vilest of criminals (Ezekiel 18). Click to view link
There are a lot of verses in there about those that worship gold and silver, interestingly enough.
They cast their silver into the streets, and their gold is like an unclean thing. Their silver and gold are not able to deliver them in the day of the wrath of the Lord. They cannot satisfy their hunger or fill their stomachs with it. For it was the stumbling block of their iniquity.
Reply from The Daily Bell
You are arguing scripture. He's arguing economics.
Posted by taxesbyanyothername on 01/08/13 08:52 PM
Please insert been, where it belongs in that last post, and delete this one.
Posted by taxesbyanyothername on 01/08/13 08:47 PM
Usury has been defined in many ways. Neither Biblical nor ancient Hebrew restrictions forbade interest altogether. An amalgam of ancient sources might be interpreted as: if a lender cannot lose because the lendee cannot pay the loan is usury. A further stricture might be not to loan for frivolous purposes.
Money is not about to start flowing to jurisdictions that forbid interest because they forbid interest, and anyone who thinks so is self deluded. Without government interference, and even mostly with it, people move their money to where they think they can get the best use of it. That has always true and it always will be.
Posted by mikef on 01/08/13 07:15 PM
And again, the problem is that people can be born into this world in debt. This is also an ecological problem. Freedom to do as you please is something Crowley may have been harping on about, and it seems to have become a libertarian meme.
Posted by mikef on 01/08/13 07:12 PM
Unfortunately Jesus and his friends were not prescribed by the old testament, and therefore Mathew can write to his hearts content. If you can find passages where this Jesus character was mentioned, please do show them.
Indeed, the idea behind the old testament is that one day, the chosen people will be able to teach it to the nations, or goyim. For the word Goyim means Nation, and they were chosen to hold and teach the law, not because they were good, for they are a stiff necked people, but because God made a promise to Abraham, Issac and Jacob.
Posted by Jeanna on 01/08/13 06:10 PM
The Bible set forth rules in the Old Mosaic Law for conditions of loaning money to the "brethren" and to strangers, to the downtrodden. They were not to charge interest on loans to their fellow Israelite countrymen, nor to the poor, nor to a stranger in need. These rules were not forbidding anyone from ever charging interest, or there would be no necessity for the scriptures which forbid excessive interest, or usury. See Exodus 22:21-27; Leviticus 25:35-44; Deuteronomy 23:19-20; Psalm 15:1-5.
If interest were to be universally banned, then the Parable of the Talent would not have expressly castigated the unprofitable servant for not at least depositing the talent in an interest bearing bank. See Matthew 25:26-27. See also Proverbs 28:8.
The intent was not to take advantage of the poor and injured, nor of the brethren. A distinction was made in several passages to abjure charging excessive interest, defined as usury.
Today we serve a master who charges interest on money which we have no contract to repay, nor have received any consideration thereof. That is usury, and we should repudiate all such debts imposed.
That has nothing to do with a voluntary contract for a loan between two people at a marketable or reasonable interest rate. Voluntary contracts should be honored. Involuntary contracts should be disallowed under rule of law.
Reply from The Daily Bell
Since this is thoughtful, Jeanna, the "usury haters" will disallow it ...
Posted by Leviathanfighter on 01/08/13 05:17 PM
An excellent article.
These are indeed desperate measures and automatically imply a lower standard of living (see Mises). But they also imply something else--destruction of the division of labor. A modern civilization cannot exist without a division of labor. A civilization is, by definition, a collection of individuals who specialize in their occupations and trade with each other with money and NOT barter. But how can there be a division of labor if there IS no labor to be had? The Greeks must find a stable, reliable currency if they are not to revert to the most pitifully primitive state.
Posted by Summer on 01/08/13 04:18 PM
Excellent responses and a very interesting website. Thanks. I think people are finally seeing though elite philosophies that justify their enslavement (such as the time preference theory). It is clear that interest is the ultimate distortion of the economy and the mother of all taxes, as it is charged upon money creation, money lending and levied on most products and services - it is a positive imposition of a charge upon all monies. Whereas in the Worgl Experiment and the Islamic Empire, negative interest Zakat/demurrage were *completely* avoidable and prevented hoarding.
It is clear that moral degradation and an exploitative interest based economic system are the age-old tools of elites:
Click to view link
Posted by KingofthePaupers on 01/08/13 04:02 PM
Jct: And the banks get no interest on any trades done with alternative currencies! Har har har har har har.
Posted by mikef on 01/08/13 03:04 PM
Usury is the problem. Its using other people to make a livelihood for yourself, until finally we have a class of parasites, who do nothing but live off interest of others, who foolishly have indebted themselves. Someone who mentioned the bible earlier was dead right, but theres no point doing that here, this is the land of classic liberalism, where the market - eg peoples desires must dictate. Its funny though how the dialectic has become "capitalism vs communism", interesting how suddenly we only have 2 choices, isn't it?
The fact that the people on this site keep ranting on about gold and silver and freemarket makes me think of the old poker addage - if you're looking around the table, and you cant see the sucker, then its you. By the time us plebs hear investment tips, the money has moved on, and we are getting in at the end of yet another ponzi, or as it used to be called(before the word mysteriously vanished from the vocabulary), pyramid scheme.
No currency will hold up during a food crisis, except food itself. Just my 2 copper cents. Everyone with half a brain has a plot of land that they have in mind to head to when the excrement hits the fan. The surest way to get your daily bread is not to have to buy it.
Reply from The Daily Bell
The "problem" is forcing people to use an economic system they may not want to use and forbidding them from using monetary tools as they wish.
Posted by bionic mosquito on 01/08/13 02:59 PM
"Ask instead why she insists on forcing her beliefs on others ... "
I don't expect a coherent answer to either question. But I remain open to a pleasant surprise.
Posted by Jed Smith on 01/08/13 02:26 PM
A couple of things that advocates of broader 'peoples money' systems never seem to be able to answer - - is who and how the money supply under such systems will be set. Their reply is usually 'by the People' when any thought and study of history will show that it comes down to a very few who manipulate the system. This is always the case.
In addition, IMO there is a misunderstanding of the nature of interest. Look up 'time preference' in relationship to this topic. Those who don't need to use all their resources now can lend them out to others for capital investment which expands the total amount and quality of goods available to people in society. - - Thie is Not the same as the rigged system of the bankster theft.
Posted by bionic mosquito on 01/08/13 11:49 AM
"Who gives you the right and wisdom to go against the commandments of God written down in The Bible as well as The Quran?"
There are commands about stoning and cutting off limbs as well. Do you advocate equally vigorously for these?
Reply from The Daily Bell
No, no, BM ... Let Niphtrique fully respect the commandments of God. Ask instead why she insists on forcing her beliefs on others ...
Posted by dave jr on 01/08/13 10:55 AM
"Usury is the cause of many problems that make governents interfere with the natural order of things."
Give me a break niphtrique. Usury is the natural order of things and government interferance is the problem. Banning anything is government interferance.
Without interest, a currencies value will quickly go to zero. People could borrow and simply say I'll pay you back tomarrow, day after day, forever.
You are making a dream case for irresponsible operators like the US Gov, where debt can be perpetually rolled over, paying back deprieciated script and taking out fresh script. What a boon, what a racket. Can I do it? I'm sure there will need to be a law.
Posted by dave jr on 01/08/13 10:41 AM
When a country imports more than it exports, then it is exporting its currency and it will be in short supply. Currency created by a central authority does nothing to remedy (balance) the problem. Alternative currencies work better because they are created by the market, this is natural currency. A natural currency will either encourage or discourage foreign trade way before things get out of balance, way before a manufacturing base is destroyed.
Posted by niphtrique on 01/08/13 10:15 AM
@Jeanna: If there is a tax on money, you will be attracted by a savings account that offers 0% interest because you do not have to pay the tax. If the money supply does not change then 0% interest is attractive and can be a positive return when there is economic growth. Economic growth will result in lower prices because there is no money printing. So savers will be better off without interest than they are now. As soon as they notice that then there will be a capital flight and the usury system will collapse.