October 15, 2008, 6:00 am

Exchange and Trade System

by: The Financial Blogger    Category: Alternative Income,Personal Finance
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Everybody knows ETF’s but only a few of us know abut ETS’. In fact, in this moment where everything is going upside down and we don’t know exactly who will keep their job or not and what will be the next effect of bad financial news, Exchange and Trade Systems could become the ultimate solution to solve your money problems. In fact, those systems can help you out living a more frugal life and save a lot of money.

Exchange and Trade Systems are still very marginal and kind of “underground”. We don’t see much advertisement and people that are running those are too busy coordinating everything to promote their vision.

Because a ETS is a vision. It’s the possibility of having a community where people help each other and use their talent for the profit of someone else for no money in return. I believe we are going to hear more about these communities in the future as our economy is seriously slowing down and we can’t keep spending as we are right now.

How does it work?

There are variations from one system to another but the whole community is based on a simple principle: exchange your talent for something else in return as long as it is not money. For example; since I am a financial planner, I could go see a family inside the community and do a financial plan and help them doing a budget. Let say that I spend 2 hours of my time with them; I get a credit of 2 hours in my “account”. That gives me the right to ask anybody in the community for 2 hours of his help, regardless of his profession or talent.

Each task is considered in term of hours or credit. On a hour basis system, I noticed that most of them consider any task as equal. For example, someone could help me out cleaning my house for 2 hours which would worth about $30 (we usually pay cleaning ladies at $15/hr around here) and she could request 2 hours from a plumber to do some repairs (which would obviously worth more than $30 if you have to pay the plumber). When they work on credit, each community can establish a value to each task. However, in order to keep it simple, most people agree to give 1 credit per hour to everybody.

The major advantage of such communities is to be able to trade your time instead of money to have stuff done. So it’s like having all the talent in the world and only taking the time to do everything by your self.

So if you are ready to take time helping other people, you could save a lot of money in returns. Everybody wins and it helps creating a good atmosphere with people around you.

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Please keep in mind that [joke]1) If you participate you are commie scum [/joke] . . . and 2) that in Canada if you provide the same service as you make a living under the bartering rules you still have to pay taxes as if you earned that income at your normal rate of hire.

So for example, an accountant can help someone build a deck, but can’t do accounting.

BTW the commie reference is simply that reducing payment for work to the same level regardless of skill, training, experience, efficiency etc is not a good thing in my book. It breeds average and lowers the average bar itself. Plus, we already have a trading system that you can use to have someone bank your services in some form so that you can use those skills later to pay for another service that you deem of equal value . . . it’s called money.

That is a great idea. I love grassroots efforts to have people band together like this.

Why is money such a bad thing? Why should my time be worth exactly what everyone else’s is? You haven’t stopped using the concept of money, you have simply replaced “dollars” with “hours”. As Traciatim points out, the main point of this alternate economy is as a method of tax evasion.

by: The Financial Blogger | October 16th, 2008 (12:30 pm)

I don’t think that the main purpose is tax evasion… I mean, if I get $25/hour for X task and I need a plumber that I have to pay $50/hour for X task, I am better off with a ETF than paying the guy.

It does not suit everybody, but I think the system can work.

I enjoyed this content, and the feedback from others is interesting.