How Human Response To A Messed Up Global Economy Part 1

The interesting development of significant increase in moneyless transactions is something we should pay more attention to. Should this trend continues, it will become a disruptive event in the future on the current global financial system. Besides virtual currency, this is another important development that will affect economy worldwide.

The Cause

The 3 financial bubbles created by the central bankers around the world in year 1998 to 2000, 2006-2008 and since 2009 have completely destroyed the normal economic equilibrium in the micro level across the world. These bubbles destroy the middle class as they were told to participate in the great invention of capitalism through all these financial instruments. As these scams collapse one after another, the misinformed population are hurt so bad economically they can never recover financially within their lifetime.

The global decline in middle class population has created a gap between the lower class and upper class population. This gap disrupts normal economic activities within a society as wealth effect can no longer trickle down efficiently without the middle class. In another words, the rich gets richer but their extra spending do not reach down the class ladder at all.

The Effect

Income obtained from labour and profits generated by small local businesses become insignificant and not sustainable due to inflationary pressure of ever increasing prices on necessities. Bigger governments destroy the rest of the disposable income these middle and lower class population could generate. Politicians always play the blame game on other countries or finger pointing at the existing system. The truth is that they do absolutely nothing to stop the situation from getting worse.

Net effect from this macro problem causes the middle and lower class populations around the world to have less money to sustain their living. More and more people are suffering as the stupidity continues.

The Strike Back

Some people who are badly hurt in this environment choose to cut back on their spending, getting multiple jobs and try their best to live on bare essentials only. These people are normal nice people who will be crushed. The reason is that no matter how hard they try the difficulties to survive will continue to increase. The route they take may be reasonable but it can only work for a short period of time.

Some others who can see beyond the immediate problems choose to strike back, big time. No, I am not talking about starting a revolution. It is next to impossible to do that in the current environment unless your country is one of those at the bottom of the GDP ranking around the world.

For revolution to work, you need majority of the people in your country to not value much of their own lives and the lives of others. You need people willing to die for a cause. When the living condition is marginally acceptable, you will never find enough volunteers to risk their lives in exchange for a regime change.

In my opinion, the strike back I have seen so far is actually better than starting a revolution at this point. The solution these resourceful people have discovered is simple – stop using government issued money. It is happening globally and it is growing strong.

Age Of Virtual Bartering

When people do not have enough money, there are other ways to obtain necessities. They can offer services or whatever existing goods they already have in exchange for the services or goods they want. This is called bartering. In case you do not know, bartering exists before money was created. It is the oldest form of making a trade among people.

In old days bartering has many constraints because you can only do that with people you know. You are also limited by your geographical location where one can deliver the goods or services efficiently. This limitation is now shattered by the Internet.

The modern form of bartering started back in early days of the Internet. Back then, the mechanism was still pretty close to the ancient practice. But things evolve very fast on the Internet. At this point, bartering groups have popped up all around the world with readily available open source software to make it happen in your local community. If you have a skill that worth something or goods with potential suitors, you can list that in these modern barter system in exchange for the things you need.

One good example is the practice of growing your own vegetables at your backyard. Even the Obamas talked about that. What they probably fail to realize, is the unintended consequence. People within close proximity start to cooperate and share their farming produce. In old days it used to be a very complex task to manage the production and co-operation. Now, it is just a matter of signing up online with the co-op movement websites and learn the skills quickly online.

As a result of this co-op, the families involved spend way less in those food items. They no longer shop at the nearby supermarket for these produce. They have less time to spend money on entertainment.

To sum it up – this small part of the fiat money economy just collapsed.

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