originally posted by James Haggerty on http://standardspeaker.com/news/down-economy-leads-to-more-bartering-1.911912

Down economy leads to more bartering

Donna Arnold sees a brighter future through the revival of her past.

“When I got married, I had my reception, my cake, my flowers and my wedding gown all on trade,” she said as she recalled her 1980 wedding.

Donna, 56, who plays bass guitar and sings in a band with her husband, Bill, sought a new direction after Pocmont resort near Bushkill closed in November. The couple had played there for six nights a week for many years and now they only perform about three times weekly, she said.

“I’ve got a great painter,” she said. “I’ve got a mechanic. I’ve got restaurants. I have counselors. I have a jewelry store.”

Bartering gains appeal in times of economic stress, tight cash and high unemployment.

“It’s grown at about a 15 percent annual rate over the last two years because of the economy,” said David Wallach, president of the International Reciprocal Trade Association, a nonprofit in Portsmouth, Va., that sets standards for the industry. “It’s a parallel capital system.”

Participants in trade exchanges acquire scrip, or bartering credits, by providing a service or selling goods within the network. Traders use scrip to buy from other partners in the exchange, who often meet online.

Each side in a bartered transaction pays a 6 percent fee to the exchange, along with monthly membership dues.

Bartering in a difficult economy has merits. It preserves cash, allows companies to find new clients and dispose of excess capacity. Traders often refer cash-paying customers to other exchange members.

“This is an efficiency that has been unrecognized,” Wallach said.

Bartering has detractors, though, who view it as value lost from the traditional cash system. Bartering thrives in unstable economies with weak currencies, said Satyajit Ghosh, Ph.D., a professor of economics and finance at the University of Scranton.

“People are getting spooked because of the long recession,” Ghosh said. “To be honest, I don’t see any value to it.

“Even if people are getting something at a deep discount, they will find that the goods and services they are providing to each other, they will not get at market value.”

Dan Dutka, though, sees value in his barter transactions.

“I’m using the barter system to go to Florida,” said Dutka, who operates a Mount Cobb vacuum cleaner sales and service business. “I got two four-bedroom condos. I’m going for a weekend and they are all paid for on trade.”

Dutka joined ITEX about a year ago and sells vacuum cleaners through the network, mostly in New England. He said his products trade at the manufacturer’s suggested price.

“It’s business I would never have had,” Dutka said. “It’s one of the best things I ever got involved in.”

“It’s all about promotion. I’ve never been involved in business, I’m a musician,” she said. “This is a nice way to get extras in an economy that you might not be getting otherwise.”