Barter Is the New Currency in Collapsing Venezuela

From Reuters, Fish for flour? Barter is the new currency in collapsing Venezuela describing how hyperinflation and failing banking infrastructure is being replaced by barter even in the capital.

Under the midday sun, dozens of fishermen wait to sell their day’s catch by a lagoon in the town of Rio Chico on the Caribbean coast of Venezuela. But they aren’t expecting cash in return.

Instead, they’re swapping mullets and snappers for packages of flour, rice and cooking oil.

“There is no cash here, only barter,” said Mileidy Lovera, 30, walking along the shore with a cooler of fish that her husband had caught. She hoped to exchange it for food to feed her four children, or medicine to treat her son’s epilepsy.

In the hyperinflationary South American country, where bank notes are as difficult to find as chronically scarce food and medicine, Venezuelans are increasingly relying on to barter for basic transactions.

Payment for even the cheapest of goods and services would require unwieldy piles of banknotes, and there simply are not enough of those in circulation…

Even in the capital Caracas, some 130 km (81 miles) to the west, many informal merchants lack access to bank services or point of sale terminals and prefer to be paid in kind.

The rise of barter exchange, amid hyperinflation and a dearth of cash, is a reflection of how the once-prosperous country is reverting to the most rudimentary of mechanisms of commercial exchange.

“It’s a very primitive payment system but it’s also very primitive for a country not to have enough cash available,” said economist Luis Vicente Leon of consultancy Datanalisis…

FO: What Could “Collapse” Look Like?

The fine intelligence folks over at Forward Observer have posted What Could “Collapse” Look Like? Let’s Look at a Country Currently in Free Fall. No, it’s not Venezuela, but Mexico.

There’s no shortage of “collapsitarian” thought and literature out there. Make no mistake, I do believe that the United States will undergo a period of collapse, but as I’ve written previously, I don’t actually like that word: it’s so vague. (What is “collapse”? 25%? 50%? 100%? Read this for my thoughts on that.)

I certainly do expect a more difficult future for the next 10-20 or more years, but I would much rather identify specific challenges and components of “collapse” other than to just call it a collapse. America has different geographies, demographics, and cultures, and so not every area will look exactly the same. I just finished reading another blog post from a guy who peddles in collapsitarian fantasy, where he argues that America is in a “supercollapse” unlike anything in the history of the world. He doesn’t really describe what the “supercollapse” looks like and he doesn’t explain what we can expect as a result.

That, by the way, is the job of intelligence. Intelligence reduces uncertainty about the future. That’s the absolute value of having good information to produce good intelligence. Through clear thinking, structured analysis, and gaining an expertise on societies in collapse (historical and contemporary), we can absolutely gain some insight into our future challenges. There’s nothing wrong with collapsitarian literature, by the way; one very positive benefit is that each book is like a very entertaining brainstorming session that informs us of the full range of possibilities. That’s extremely beneficial, yet it’s not intelligence. The next step is to examine your local area, complete an Area Study, and begin thinking through the consequences and form some logical conclusions about how specific events or conditions would affect your area. You’re reducing uncertainty about the future by identifying what’s more likely and what’s less likely to happen. But I digress…

So what could our collapse look like at a local level? Let’s look no further than Mexico, our southern neighbor in absolute free fall, for some ideas. Here are a few things we’ve observed over the past year:

  • Mexico just elected a Leftist populist leader who railed against the incumbent president over 1) widespread corruption, 2) rising crime, 3) the inability to deal with the cartels, and 4) a lack of economic growth.
  • Drug cartels run Mexico. Underneath the positions of de jure power (the president, the congress, state governors, mayors, etc.) are echelons of de facto power. When we talk about collapse, this is the collapse of the Mexican government which lost political control over large swathes of their country. Do you remember the scene in Captain Philips, where the Somali pirate is holding the AK-47 and says, “Look at me. I am de captain now”? That’s the relationship between irregular forces in de facto authority/control over an area, and the government with de jure authority. And for much of Mexico, that’s the relationship between cartels, militias, and their federal government. That’s a great example of collapse.
  • The Associated Press last week reported about a rise in “mass crime” in Mexico…

Click here to read the entire article at Forward Observer.