by Peter Schiff, Schiff Gold:

Instead of selling his soybeans for devalued pesos, Gustavo Tione exchanged 30 tons of soy for about 8,000 liters of diesel from the state-run oil company. This is just one example of a growing barter economy in Argentina as a 24% inflation rate rapidly erodes the value of the country’s currency.

As Bloomberg reports, the rise of barter is simple economics. Commodities hold their value better than than cash.

So, why bother with fiat currency if you don’t have to?

Barter is the most basic economic transaction. You give me something I want or need. In exchange, I give you something you want or need.

YPF, the Argentine energy company, uses barter to bypass the peso. The company barters with farmers, trading fuel for wheat, soy, and corn, and then sells it on the dollar-based export market for grain. Of course, this scheme will fall apart if the dollar crashes. Nevertheless, it illustrates the power of barter.

Barter may seem primitive, but everybody should consider developing local barter networks. In the event of a systemic economic collapse, these networks will provide vital channels for the exchange of goods and services if traditional markets cease to function.We saw the value of localized barter systems first-hand in the wake of the Greek economic crisis. A robust barter economy developed out of sheer necessity, as everyday Greeks had to find ways to cope with cash withdrawal limits and currency shortages.

In Venezuela, people have turned to their smartphones to barter goods. Mothers trade pasta for diapers. A bag of flour can get you a bottle of shampoo.

But barter can be tricky. You have to find somebody who has what you want and wants what you have. What happens if they guy with eggs wants shoes and you don’t have any footwear to trade?

You need to have something to barter with that virtually everybody will want.

Silver.

Silver is a medium of exchange that won’t lose value because the government creates more of it out of thin air. Silver is universally recognized as money. It’s perfect for barter.

Investing in silver is one of the most important things you can do to prepare for an economic collapse. Even a temporary shutdown of the banking system would create chaos. Imagine what would happen if there was an extended, widespread power failure. If you have silver on hand, you will have the means to obtain the goods and services you need.

Buying “junk silver’ is a great route to take. The term “junk silver” refers to US quarters, dimes, and half-dollars, minted before 1965. Because of the silver content inside, those pre-1965 coins are far more valuable than their face value. Their value and portability make junk silver coins perfect for barter transactions.

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