10 Facts about Bartering
Get the interesting Facts about Bartering if you want to know the system of exchange in which the services or goods are directly exchanged with other services or goods. In the bartering system, the money is not used. It was mostly conducted in the past when the money had not been made. The bartering can be multilateral or bilateral. It is bilateral if the reciprocal exchange involves two individuals. But it can be multilateral if it is mediated through the barter organization. Let’s find out more interesting facts about bartering below:
Facts about Bartering 1: the monetary crisis
In this present day, bartering system may be used during the monetary crisis as a method of exchange. It replaces the money. When the currency is not stable, people often do barter.
Facts about Bartering 2: Adam Smith
Adam Smith is one of the important persons in economy. He explained the emergence of money and explained the inefficiency of barter system in the ancient society. Get facts about Adam Smith here.
Facts about Bartering 3: direct barter
The western market economies helped the people to do direct barter since 1830s. The exchanges were supervised to make sure that the intermediates would never take the profit. Moreover, it used the labor theory of value to determine the alternative currencies.
Facts about Bartering 4: the examples of the system
Some examples of the barter systems in western market are the Cincinnati Time Store, Owenite socialist, LETS system and Ithaca HOURS.
Facts about Bartering 5: the father of economics
The people always consider Adam Smith as the father of economics. He believed that the government did not create money.
Facts about Bartering 6: the everyday exchange
Barter may occur between strangers too. The two individuals exchanged their goods if only they needed it. It should be in reciprocity act.
Facts about Bartering 7: the ineffective of bartering system
The bartering system soon was changed by the presence of money. It has various limitations. The barter usually occurs between two persons. Both should own what the other person wants. However, there is no common measure of value. The last limitation is seen on the presence of double coincidence of wants.
Facts about Bartering 8: the value
If people use money, they will know the value of the good. In the bartering system, the value of the good cannot be measured.
Facts about Bartering 9: storing wealth
It will be impractical to store the wealth if all items that the people need are stocked in perishable goods. In past, people stored their wealth by having cattle or pigs. Find out facts about banks here.
Facts about Bartering 10: benefit
Even though it has limitation, barter also gives benefits. When the money is in short supply, people can do direct barter.
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