Download modernized barter trade, bottom up projection under the

MODERNIZED BARTER TRADE, BOTTOM UP PROJECTION UNDER THE
COORDINATION PRINCIPLE
BY
SINGIZA IBRAHIM
+256789587558, +256700251982
[email protected]
APRIL 2013
Abstract
The paper discusses an alternative exchange instrument; modernized barter trade and bottom
up projection under the coordination principle as used in the daily exchange of goods and
services. The study will continue to show the flexibility, speed, quality and velocity of the
alternative exchange instrument as it will help in boosting the economic performance of any
economy.
Modernized barter trade aims at solving the weaknesses of the monetary system by use barter
currencies or invisible currencies in meeting day to day transactions. The paper further argues
that the use of the monetary system alongside modernized barter trade and bottom up
projection under the coordination principle will increase efficiency in trade.
Barter currencies will be used in the exchange of goods and services in absence of cash. They
can be in any form of currency and can be regulated by the central bank as money. The price of
a good or service in the monetary system will remain the same in modernized barter trade as
set by the government.
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TABLE OF CONTENTS
Abstract………………………………………………………………………………………………………………………………..2
1
Introduction……………………………………………………………………………………………………………..…….5
2
Ancient barter trade and its limitations…………………………………………………………………………..7
2.1 Terms used in transforming ancient barter to modernized barter…………………………………..8
2.2
Why modernized barter trade?........................................................................................9
3
Modernized barter trade, Bottom up projection under the coordination principle……….9
3.1
Modernized barter trade and it’s expression………………………………………………………………10
3.1.1 Transaction process or modal……………………………………………………………………………………..11
3.1.2 The transaction modal under the monetary system…………………………………………………….11
3.1.3 The transaction modal under the modernized barter trade system……………………………..11
3.1.4 Design and application of modernized barter trade……………………………………………………..11
3.2
Bottom up projection………………………………………………………………………………………………….12
3.3
The coordination principle………………………………………………………………………………………….12
3.4
Implementation plan of modernized barter system……………………………………………………13
4
Relevant literature…………………………………………………………………………………………………….14
4.1
IRTA’s CEO Paul suplizio’s views on the role commercial barter in the modern world…14
4.2
Modernized barter trade as a system of exchange………………………………………………………18
4.3
The role modernized barter in modern economies………………………………………………………19
4.3.1 Modernized barter trade and modern technology……………………………………………………….19
3
4.3.2 Modernized barter system and the banking system……………………………………………………20
4.4
Discussions and comparisons……………………………………………………………………………………….20
4.4
Ancient Barter trade versus modernized barter trade…………………………………………………20
4.4.1 Ancient barter system versus Monetary system…………………………………………………………..20
4.4.2 Monetary system versus modernized barter system…………………………………………………….21
4.4.3 Monetary value versus invisible value…………………………………………………………………………..21
4.4.5 Money versus barter currencies…………………………………………………………………………………..22
4.4.6 Monetary policy versus modernized barter policy………………………………………………………..22
4.4.7 Modernized barter system versus the fiscal policy………………………………………………………..22
5.
Methodology and data………………………………………………………………………………………………….23
6.
Conclusion……………………………………………………………………………………………………………………24
References……………………………………………………………………………………………………………………………….25
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1. Introduction
Modernized barter trade solves all the problems of the ancient barter trade by attaching an
invisible value to goods and services to be used in the exchange. The modernized barter trade
and bottom up projection run under the coordination principle to make everything happen in
the transaction process. This new system is aimed at helping the monetary system in exchange
of goods and services.
World economies are changing at a very high speed, and the need to exploit various economic
resources has risen. This system will help micro economics by improving cash flows, increasing
sales and profits at both international and corporate level. It will increase sales in the way that
companies will stop producing at excess capacity and encourages them to sell off their
inventory as quick as possible. Therefore the government will increase its revenue through
taxing the large profit base realized by various companies. On the other hand it will help macro
economics by reducing inflation and put little risk on the economy in times of a financial crisis
by helping the reserve money programme to perform.
Through the modernized barter trade and bottom up projection under the coordination
principle, a new era of economic thinking will be created. The speed, flexibility and convenience
in the transaction process will help economies to increase GDP at a very high rate which will
lead to both economic growth and development.
However, the innovative design calls for very close supervision and management to produce
desired results. Its framework requires good technology to keep transaction records with
accuracy. The new system will give way to improvement of business and help various
economies stimulate the flow of transactions in the economy. It will create stability in the
dynamic trade environment through decreasing the occurrence of frozen assets. The
modernized barter trade design performs the duties of money in the transaction process since
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it holds the fact that the monetary value of good or service equals to the invisible value of a
good or service.
The bottom up projection is more of supporting engine to modernized barter trade in ensuring
its efficiency in solving all the problems of ancient barter trade. The projecting of economic
activities to meet the money demand and supply through the coordination principle will create
an easy way of implementing the new system to work together with the monetary system.
The cores of the new system are not predominantly driven by the supply and demand of paper
money but call for the use of non cash transactions to improve trade. The new system can act
as storage of wealth and means of deferred payment to facilitate future payments. It’s time we
create an economic revolution with the new mode of carrying out transactions to help the
monetary system perform perfectly. The new system is designed to minimize the problems of
the monetary system and make countries proceed with excelling economies.
The new system can be introduced to various economies around the world depending on their
structures. The interdependence between transactions will drive economies forward with the
new system and create room for favorable trade. It can be closely supervised better than the
monetary system making it easier for economic planning.
The strategy outlines a critical realistic approach in the transformation of the barter trade
system. It aims to reform the weaknesses of the ancient barter trade system against the
monetary system. The combination of modernized barter system and monetary system will give
rise to a new economic order. This will be achieved through the use of modernized barter trade
monetary trade.
Not many years ago, almost every country suffered a financial crisis, while some are progressing
with a recession plan; others are still dwelling in it. Adoption of the strategy reduces the effects
of the financial crisis since the economy is closely watched with the plan’s flexible approach.
The plan continues to reduce on the public debts to the strengthening of the monetary policy
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system. During the process of strengthening the monetary policy system, the fundamental
difficulties associated with operating the reserve money programme will be improved. The
procedures taken will give magnitude to aggregate demand and supply of goods and services
therefore avoid the occurrence of frozen assets.
Currently, countries are undergoing a fundamental transformation and the rate at which this
happens will increase further in the future. Countries that will be successful in improving the
financial sector with use of very good economic policies through better financial and fiscal
policies will be able to produce sound economies. Every government across the world gets
most of its money from its local taxes and exports, so improving on the tax system will give
birth to easy support of the government programmes. Many of the developing countries will be
able to sort out their foreign exchange issues in order to trade between themselves.
2. Ancient Barter trade and its limitations
The following is the definition of barter trade and its limitations according to wikipedia.org ;
Barter is a system of exchange by which goods or services are directly exchanged for other
goods or services without using a medium of exchange, such as money. It is distinguishable
from gift economies in that the reciprocal exchange is immediate and not delayed in time. It is
usually bilateral, but may be multilateral (i.e., mediated through barter organizations) and
usually exists parallel to monetary systems in most developed countries, though to a very
limited extent. Barter usually replaces money as the method of exchange in times of monetary
crisis, such as when the currency may be either unstable (e.g., hyperinflation or deflationary
spiral) or simply unavailable for conducting commerce.
The limitations of barter
Barters' limits are usually explained in terms of its inefficiencies in easing exchange in
comparison to the functions of money.
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
Need for presence of double coincidence of wants: For barter to occur between two
people, both would need to have what the other wants.

Absence of common measure of value: In a monetary economy, money plays the role
of a measure of value of all goods, so their values can be measured against each other;
this role may be absent in a barter economy.

Indivisibility of certain goods: If a person wants to buy a certain amount of another's
goods, but only has for payment one indivisible unit of another good which is worth
more than what the person wants to obtain, a barter transaction cannot occur.

Lack of standards for deferred payments: This is related to the absence of a common
measure of value, although if the debt is denominated in units of the good that will
eventually be used in payment, it is not a problem.

Difficulty in storing wealth: If a society relies exclusively on perishable goods, storing
wealth for the future may be impractical. However, some barter economies rely on
durable goods like pigs or cattle for this purpose.
2.1 Terms used in transforming ancient barter to modernized barter

Monetary value of a product or service (MVps)
The value or worth that a product or service would bring to someone if sold under the
monetary system.

Invisible currencies or barter currencies
The currencies used under modernized barter trade for example barter dollars or
invisible dollars, barter shillings or invisible shillings.

Invisible value of a product or service (IVps)
The value or worth that a product or service would bring to someone if sold under
modernized barter system.
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2.2 Why modernized barter trade?
I originated modernized barter trade from comparing money has a legal tender used in
exchange today and barter trade as a medium of exchange used in the early days. After critical
analysis of the two forms of exchange, I came up with modernized barter trade and bottom up
projection. The ideologies run alongside each other for better results during the
implementation plan.
The modernized barter trade ideology supports the existence of the invisible value on products
and services. Basing on the fact that barter trade had many limitations compared to monetary
system it was dropped as a medium of exchange for goods and services. However, barter trade
supported the fact that goods and services would be exchanged for others. This made me give a
product or service an invisible value to make it more flexible in the barter trade. This was
successful because each product can be sold by its monetary value for example one kilogram of
beans costs $2.00 and transport costs $1.00. This means that $2.00 and $1.00 are monetary
values of a product (beans) and a service (transport) respectively and have the same invisible
value respectively on which they can be sold. The attachment of a invisible value to a product
or service makes it more flexible in the modernized barter trade system.
3. Modernized barter trade, Bottom up projection under the coordination principle
Modernized barter trade system is a new developed alternative exchange instrument to the
monetary system which helps in the day to day exchange of goods and services. Modernized
barter trade and bottom up under the coordination principle combined will help in the
implementation of a new exchange instrument.
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3.1 Modernized barter trade and it’s expression
Modernized barter trade is the use barter or invisible currencies in the exchange of goods and
services. The attachment of the invisible value which is the same as the monetary value on the
goods and services gives them flexibility in the transaction process. Therefore;
The monetary value of the product or service equals to the invisible value of the product or
service :
MVps = IVps
Where;
MV is money value
IV is invisible value
ps is product or service
The expression implies that the monetary value of a product or service in the monetary system
is equal to the invisible value of the product or service in modernized barter trade due to the
monetary and invisible value attached on the same product or service. Barter currencies have
got an invisible value which allows them exchange goods and services. Although the engine has
got limitations when managed poorly, it brings about a new approach in the exchange of goods
and services. Countries will find ways to manage and apply it basing on the structures of their
economies.
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3.1.1 Transaction process or modal
The transaction process compares both the monetary value and the invisible value. It clearly
shows the exchange of goods and services using the values.
3.1.2 The transaction modal under the monetary system
monetary value
Exchange
products and services
Transactions in the economy depend on the money demand and supply. Products and services
are exchanged for their monetary value.
3.1.3 The transaction modal under the modernized barter system
Invisible value
Exchange
products and services
Transactions in the economy depend on the barter currencies demand and supply. Products
and services are exchanged for their invisible value.
3.1.4 The design and application of modernized barter trade
The design illustrates how barter currencies will look like and the application will clearly show
how they are applied in our economies. The design and application modernized barter trade
calls for high technology which will establish its efficiency.
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Design
Barter currencies have no definite design like money which includes notes and coins but can be
managed by information systems. Gadgets that will carry them when used in the exchange have
to be built for example look at how telecom companies help us manage its customer tailored
services. Gadgets that send directly barter currencies to each other are needed to be put in
place. The central bank has to control a centered database for these gadgets just like how
telecoms companies manage their services. Check out the analyzed system as proposed by
Singiza Ibrahim for more information about the gadgets to be built and their management.
Application
Modernized barter system will be applied alongside the monetary system for better results. The
monetary system will help modernized barter system in areas where it can’t operate since it
highly depends on technology and mutual agreements. Applying it to modern economies is a
strategic plan which will take time in order to fit it in the daily running of business.
3.2 Bottom up projection
This is the projecting of trade volume from the bottom to the top to meet the money demand
and supply. Bottom up projection boosts the trade to give way to improved cash flows, sales
and increasing profits. Under the bottom up projection, trade should be projected towards the
money demand and supply to create efficiency.
3.3 The coordination principle
The principle states that there is interdependence between various economic activities in that
the occurrence of a transaction leads to the occurrence of another. This principle is very
important also in the networking of the economy to make modernized barter trade applicable.
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Transactions carried out in the economy have an interdependent relationship that is to say a
transaction at a given time will accelerate the occurrence of another transaction at another
given time hence showing the co-ordination. Co-ordination of economic activities in the
monetary system highly depends on the money demand and supply where as those in the
modernized barter trade will highly depend on the demand and supply of barter currencies.
However, the co-ordination principle can give more meaning in both the monetary system and
the modernized barter trade system when they are pulled together to trigger economic
performance. This can be more emphasized when modernized barter trade system is
introduced to ensure the effectiveness of the monetary system.
3.4 Implementation plan of modernized barter trade system.
It can be said that the implementation of this critique is valid to both developed and
developing countries. Basing on the counterfactual used, the implementation of the strategy in
developed and developing countries will highly depend on their technological levels. Different
modifications will be made to make the plan suitable to various economies around the world.
The perspective use of the alternative exchange instrument that is to say modernized barter
trade will not only improve the financial sector but perfectly enable governments to monitor
the monetary system closely. The improvements will be witnessed during more direct control
and involvements of governments in the economic activities. Developments in various sectors
will be supported by these modernized barter trade since all sectors highly depend on the
financial sector, and then its improvement will bring about balanced growth.
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4. Relevant literature
There is various literature about modernized barter trade around the world. The International reciprocal
trade association (IRTA) is nonprofit organization which aims at regulating modern barter. It has been
able to manage some business using modern barter but it has failed to make it work like money, but I
was able to break this barrier by attaching an invisible value on a product or service to make it later in
the exchange.
4.1 IRTA’s CEO Paul suplizio’s views on the role commercial barter in the modern world
What would you say if you were called upon to testify before your national legislature on the
economic rationale for barter and whether it should be encouraged as a matter of public
policy? In this think –piece, IRTA’s CEO Paul suplizio tackles a question that the barter industry
will have to confront in the not-too-distant future.
To understand the role of commercial barter in the modern world, he looked at barter’s role at
four distinct levels: the firm, the community, and the national and international economies.
Barter and the Firm
Business people barter because they are able to finance the purchases of things they need out
of the additional sales of their own produce or service. When a merchant buys something using
barter credits, he knows that the purchase will be paid for by his sales to other businesses in
the market place.
In a cash situation, the cash spent by the merchant for the same purchase would have to come
out of existing sales, not new sales. He has no assurance, when he makes a cash purchase, that
this will result in additional sales of his own product. His prospects for making additional sales
increase when he participates in the barter market place, because barterers will go out of their
way to buy from other barterers. This is because they are paying with their own unused
inventory or spare capacity.
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The economic advantages of barter hinge on the fact that barter brings in new business and
conserves cash. Barter sales are an increment over and above cash sales. They are supplement
to a firm’s cash business, usually amounting to not more than 20 percent of total business. All
firms can take advantage of barter to bring in new business. Those firms with spare capacity or
excess capacity have strong incentives to do so.
Financing purchases through additional sales of its own product or service is often the cheapest
method to finance available business. This is because it is paying for its purchases with the
profit margin on its extra sales or unused capacity.
Incremental barter sales yield trade dollars or trade credits which may be spent with the barter
company or other members of the barter system. Trade dollars are units of account
denominated in dollars representing the right to receive, or the obligation to pay in goods or
services available throughout the system. These accounting units are maintained by the
exchange, which acts as a central clearing house. The cost of one dollar is the inventory, labor,
or other cost of producing an additional dollar’s worth of barter sales. A firm buys with trade
dollars which cost it less than the revenue it earns from extra sales. In textbook economics, as
long as incremental revenue exceeds incremental cost, there will be an economic incentive to
make the extra sale.
As an example, take an auto parts supplier who does a good deal of direct mail advertising. He
joins a barter exchange and notes that several printers are members. Other things being equal,
he has an incentive to buy his printing from the barter printers because (a) he won’t have to
reduce his cash flow for this business expense, but instead, (b) he can finance this expense out
of trade dollars earned from barter sales of his own products and services to other members of
the barter system, at a price that exceeds his incremental cost.
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Barter aids the businessman who has reached a certain level of cash sales and still has the
capacity to expand output; or who has excess inventory or unproductive assets. Few and
fortunate, indeed, are the business people who, having made an investment in plant and
equipment, find themselves operating at full or over-full capacity. For most firms, spare
capacity and obsolescent or unused inventory are a normal occurrence, with a powerful
economic plus: they permit additional sales at relatively low incremental cost.
Examples are the printer, with large sunk costs in equipment, but relatively low cost of
additional output; the hotel with rooms unfilled; the dentist with time to take more patients;
the radio or television station with unsold advertising. These firms are foregoing income from
their unused capacity. If shown how to stimulate additional sales through barter, they have a
strong incentive to make those sales as long as they can cover their costs. The price at which
they can sell on barter will either be the same as the normal cash price, or as a minimum, a
price greater than the cash liquidation value of inventory. Firms with high cash inventory costs
will find barter even more advantageous if they are able to receive some cash in the transaction
to apply to the cost of their inventory.
Income taxes take away part of the extra profit from barter sales. However, even at the highest
bracket rate, a firm makes money after taxes on its additional sales. When reducing the extra
profit, the income tax should not affect a firm’s decision to make sales to reap that profit. This
applies whether the additional sales are cash sales or barter sales. Since passage of the Tax
Equity and Fiscal Responsibility Act of 1982, barter exchanges are required to report the barter
income of their clients to IRS on Form 1099-B.
The economic advantages of barter can be seen by comparing a firm’s position before and after
barter. We see that barter results in additional revenue, hence added profit; barter enables a
firm to conserve cash, resulting in better liquidity and a saving equal to the going cost of
money. Firms also gain from an intangible web referrals, advertising, and associations that
generate both additional cash and barter business.
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The barter company’s commission charges must be included in a firm’s cost calculation, but
these charges are normally not a deterrent to barter. Indeed, the largest cost a firm can
experience is the income foregone by not selling on barter. In many cases, firms might find it
profitable to pay an even higher commission in order to have the opportunity to reap additional
profits through barter sales.
Barter and the Community
Barter would benefit an economic community even if the barter system consisted of firms who
had previously been each other’s cash customers. This is not to say that barter sales should
replace cash sales at the same selling price, they should not. But the reality is that cash sales are
limited by cash incomes of firms in the community, resulting in some firms having excess
capacity. These firms do more business with each other if they can barter because of their
ability to (1) make additional sales out of excess capacity, earning “new” money in the form of
trade credits, and (2) paying for what they buy with additional trade credits whose cost to them
is incremental cost of their own product or service.
Establishing a barter exchange results over-all in new business for the community rather than
displacement of pre-existing cash business. This conclusion stems from the existence of surplus
inventory or excess capacity in the cash economy, and the ability of firms to make extra sales
and earning “new” money in the form of trade credits. The new money supply adds to cash
money supply, and the extra liquidity finances a higher level of real trade.
Barter and National and International Economy
By increasing demand for final goods and services in an economy, barter generates additional
employment, production, and purchasing power. It results in a higher rate of capacity
utilization, and enables firms to spread their overhead costs over more units of output, thereby
reducing average costs and lessening inflationary pressures. Textbook economics tells us that
when an economy is operating at full capacity, costs shoot up dramatically because of resource
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shortages and bottlenecks. But it is clear that there is a range between current capacity
utilization (about 80 percent in the U.S.) and full capacity within which firms can expand output
at constant or even declining cost. It is within this range that commercial barter transactions
take place.
The reality is that a modern economy lacks a fully elastic currency, capable of expanding with
the growth of production and providing the liquidity needed to clear product and service
markets. Because monetary fluctuations have contributed to economic instability in the past, a
nation’s money supply is not permitted to expand to meet the demand for money to finance an
increase in gross domestic product. Instead, the money supply is controlled by monetary
authorities who have their eyes fixed on particular economic objectives: curbing inflation,
ensuring full employment, protecting the value of the currency in foreign exchange markets,
and so on. Balancing between these sometimes conflicting objectives often leads in advanced
economies to a policy of monetary restriction. This restrains the flow of spending in the in the
cash economy, limiting demand for output, and creating excess capacity.
Barter and its modern counterpart, the creation of trade credit to finance greater demand
foods and services, helps alleviate monetary stringency, puts unutilized capacity to work, and
speeds up the flow of goods and services to their most productive uses. It thus adds an
important measure of flexibility to the trade and payments system and market adjustment
mechanisms of the domestic and international economies at a period in history when global
economic organization is undergoing a dramatic restructuring. Commercial barter should
therefore, as a matter of public policy, be encouraged
4.2 Modernized barter trade as a system of exchange
Modernized barter trade has solved all the problems of ancient barter trade through the use of
the invisible value to equally match the monetary system and perform even beyond it.
Countries will need to apply modernized barter trade to increase efficiency in the exchange of
goods and services. The speed, flexibility, velocity and convenience in the use of modernized
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barter will not only ease transacting of goods but it improve on quality in the exchange due to
its application.
4.3 The role modernized barter in modern economies
The role of barter in the modern economies will be looked at four distinct levels: the firm, the
community, and the national and international economies.
Modernized Barter and the firm
Firms will need to apply modernized barter to meet their day to day transaction needs. These
non cash transactions will help firms trade with their clients through allowing fast exchange of
goods and services. Firms will find it easy to both keep and track their cash flows since the
system will provide a clear about incomes and expenditures in their trade.
Modernized Barter and the community
The community influences the firms through providing the market of goods and services. The
ease with which the community will trade it’s goods services will be seen with the application of
the barter system.
Modernized Barter and National and International Economy
By improving the exchange system in the economy, modernized barter provides speed, quality
and convenience in buying of goods and services. The government will find it very easy to
manage their fiscal policy because modernized barter provides a clear view of accounts of
various institutions.
4.3.1 Modernized barter system and modern technology
Modern technologies will play a vital role in the development of various information systems
that will help in the management of barter currencies. Modern technologies will be the heart in
both implementing and applying of modernized barter.
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4.3.2 modernized barter system and the banking system
Banks will find it very easy to manage accounts of different people. The central bank will
provide a system which will help commercial banks to connect the barter gadgets direct to
banks of their choice. This will reduce on the liquidity preference of people since the barter
currencies will always be in safety management of commercial bank and are available to its
customer at any time. The exchange system will improve the services provided by the
commercial bank hence making it very easier for the central bank to regulate the economy.
4.4 Discussions and comparisons
Discussions and comparisons of modernized barter system and other economic variables is
very important in adaptation of the exchange system for its application.
4.4.1 Ancient Barter trade versus modernized barter trade
Modernized barter trade has solved all the problems of ancient barter trade including absence
of common measure of value, indivisibility of certain goods, lack of standards for deferred
payments, difficulty in storing wealth and need for presence of double coincidence of wants by
attaching an invisible value to products and services.
4.4.2 Ancient barter system versus Monetary system
The monetary system saved us from ancient barter trade which was characterized with
limitations which could hinder exchange of goods and services. Although it’s affected with some
problems but it has helped economies advance from primitive ones to modern ones. The
monetary system solved all the problems of ancient barter system and gave man an easy way of
exchanging goods and services.
Money is a good system and much better than straight barter. If the only system for obtaining
goods was barter, then you would have to find someone who wants what you have and also
has what you want. With the money system, you only have to find someone who wants what
20
you have (goods or services) that you can receive money for, then you can trade money for the
things that you need. Barter worked well in the past when most people provided for their own
basic needs of food and shelter, but these days, people wouldn't have the slightest idea where
to start if they were given a plot of land and expected to provide for their families.
(http://answers.yahoo.com)
4.4.3 Monetary system versus modernized barter system
The monetary system is working perfectly in the modern economies by helping us meeting
both our daily and future transactions. All the way different measures have been taken to
improve it’s application in our economies. It’s flexibility and adaptability to different user needs
can also become its weakness, as it may lead to unsustainable growth models and imbalances.
The monetary regime has been so useful in both global economic growth and development
through facilitating our financial sector. The exchange system in the monetary system is very
flexible but it doesn’t keep track of transactions made.
The modernized barter system comes with a more flexible package than the monetary system
in that, unlike the monetary system which doesn’t see a financial crisis coming, modernized
barter trade system keeps track of records which can be assessed to take safety measure to
prevent a crisis. It’s very easy to monitor modernized barter than the monetary system since
databases to witness the occurrence of different transactions are put in place. This further
helps governments not to be cheated of tax since the modernized barter system brings out all
previous transactions of different business entities.
4.4.4 Monetary value versus invisible value
As presented earlier that the monetary value of product or service equals to the invisible value
of a product (MVps = IVps), and as applied it will bring satisfaction to the user. The invisible
value attached on goods and services makes them lighter in trade by eliminating all the
problems that ancient barter trade faced. The invisible value as used in modernized barter
emphases the use barter currencies which will be given in for goods and services.
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4.4.5 Money versus barter currencies
According to investopedia.com, money, in and of itself, is nothing. It can be a shell, a metal
coin, or a piece of paper with a historic image on it, but the value that people place on it has
nothing to do with the physical value of the money. Money derives its value by being a medium
of exchange, a unit of measurement and a storehouse for wealth. Money allows people to
trade goods and services indirectly, understand the price of goods (prices written in dollar and
cents correspond with an amount in your wallet) and gives us a way to save for larger
purchases in the future.
4.4.6 Monetary policy versus modernized barter policy
According to wikipedia.org , Monetary policy is the process by which the monetary authority
of a country controls the supply of money, often targeting a rate of interest for the purpose of
promoting economic growth and stability. The official goals usually include relatively stable
prices and low unemployment. Monetary theory provides insight into how to craft optimal
monetary policy. It is referred to as either being expansionary or contractionary, where an
expansionary policy increases the total supply of money in the economy more rapidly than
usual, and contractionary policy expands the money supply more slowly than usual or even
shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a
recession by lowering interest rates in the hope that easy credit will entice businesses into
expanding. Contractionary policy is intended to slow inflation in order to avoid the resulting
distortions and deterioration of asset values.
4.4.7 Modernized barter system versus the fiscal policy
Fiscal policy won’t change at all due to application of the modernized barter system but the
collection of taxes will be made easier due to easy tracking of companies’ trading records.
Companies will not find it difficult to dodge taxes because their trading records are easily
collected.
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5. Methodology and data
The study employs an innovative approach aimed at improving ancient barter trade to a
modernized one. Singiza Ibrahim developed ideas that have given ancient barter trade a new
look which has enabled it to exchange goods and services as compared to the monetary
system. The alternative exchange instrument is developed to assist the monetary system in
trade. Vital data has been brought together in order to make this idea work like money and
even better. The attachment of an invisible value to goods and services enabling them to be
exchange unlike the ancient barter system which had a lot of limitations to trade goods and
service
In this paper we follow the methodological approach in management of the monetary system
as it will be needed in the management of modernized barter trade. The development of the
expression MVps = IVps (the monetary value of a product or service equals to the invisible value
of a product or service) will give and easy way in the applying of the new system. Given the
different look of barter currencies and money, the role in the exchange of goods and services
will remain the same.
Unlike the old system of barter which didn’t have speed, flexibility and convenience, this paper
focuses on the improved version barter that has come with that is the combination of speed,
flexibility and convenience. The trend by which economies have to apply modernized barter
alongside the monetary system is very critical to technologies to be applied.
The system analysis towards it’s applicability should be the major concern to use of modernized
barter trade since it basically leans its applicability to modern technologies. The development of
various systems towards the use of barter currencies will become our major concern.
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6. Conclusion
As various countries have taken measures to boost the performance of their economies, the
structural economic policies to reform the economy and improve the exchange of goods and
services have to be guided to achieve strategic economic goals. However, with my modernized
barter trade firms, communities, national and international will increase the efficiency in the
exchange of goods and services. The use of modernized barter trade and bottom up projection
under the co-ordination principle will improve on the economic performance of both
developing and developed countries
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References
http://en.wikipedia.org/wiki/Barter
www.irta.com
http://www.investopedia.com/articles/07/roots_of_money.asp
http://answers.yahoo.com/question/index?qid=20090305131818AAJoiqV
http://en.wikipedia.org/wiki/Monetary_policy
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