Latest / Stagflation Conversations with Fexingo: High Inflation, Slow Growth, and 1970s Echoes / Why Stagflation Is Driving a Boom in Barter Networks
Transcript
- Lucas: Luna, I want to talk about something that feels almost retro — barter. Trading goods and services directly, no cash changing hands. It's been popping up more and more in the data, and I think it tells us something real about this stagflation moment. Luna: Barter? Like swapping a dozen eggs for a haircut? I didn't realize that was making a comeback. Lucas: Not exactly the backyard version. I'm talking about organized business to business barter networks — platforms that let companies trade excess inventory or idle capacity for things they need. The International Reciprocal Trade Association, or IRTA, just released numbers showing that barter transactions among small businesses in the U.S. jumped 34 percent between 2024 and 2025. And early 2026 data suggests another 12 percent uptick. Luna: Thirty-four percent — that's not a blip. What's driving it? Clearly the inflation we've been talking about. Lucas: Core CPI hit 3.3 percent annualized in April, according to the Fed's preferred gauge. And nominal GDP is up, but real GDP growth is sluggish — under 1 percent annualized in the first quarter. So you've got rising prices plus weak demand. That's the stagflation recipe. For a small business, cash is getting tighter. You still have to pay rent, utilities, payroll. But you might have unsold inventory or open service slots. Barter lets you turn those into value without spending scarce dollars. Luna: Right — it's a liquidity workaround. I read about a HVAC contractor in Nashville who used a barter network to get legal services for his business. He had a slow month, but instead of laying off a technician, he traded two furnace repairs to a law firm that needed its office HVAC fixed. Lucas: That's a perfect example. The law firm got its furnaces serviced for zero cash outlay, and the contractor got a contract review and some trademark work. Both sides preserved cash. That's the core of it. The big platforms — Tradebank, IMS, Bartercard — they report membership is up 20 to 30 percent since 2023. And it's not just mom and pops. Some regional construction firms are using barter to move surplus building materials. Luna: It reminds me of the 1970s, when barter really took off during the oil shocks. There were even barter newspapers listing offers. Lucas: Exactly. Same pattern: high inflation, stagnant growth, and a crisis of confidence in the currency's purchasing power. In the 70s, barter was often informal — classified ads, local clubs. Today it's digitized. These platforms have trade credits, escrow accounts, even dispute resolution. It's a proper parallel economy. And the IRTA estimates that global corporate barter now accounts for about 1.2 trillion dollars in transactions annually. That's up from maybe 800 billion a decade ago. Luna: One point two trillion. That's real. But how does a small business actually get started? Do they just sign up and start swapping? Lucas: Mostly, yes. You join a network like Tradebank, pay a modest membership fee, list what you can offer — whether it's services, products, or capacity. Then you earn trade credits when someone buys from you. You spend those credits on other members' offerings. The platform takes a small commission, usually in cash. So there's still some cash cost, but the bulk of the transaction is non-monetary. Luna: What about taxes? The IRS definitely wants its share. Lucas: Absolutely. Barter income is taxable. The platforms are required to issue 1099-B forms for transactions over a certain threshold. So it's not a loophole. But from a cash-flow perspective, it's a lifeline. You're swapping value for value without needing working capital. Luna: And I imagine it builds community resilience, too. When you trade with a local business, you're strengthening ties that could help during a downturn. Lucas: That's a good point. There's a relational aspect that pure cash transactions lack. But there are also risks. You might end up with trade credits you can't spend if the network's offerings don't match your needs. Or you could overvalue your own goods. And if inflation accelerates, the purchasing power of those credits erodes just like cash. Luna: So it's not a perfect hedge. But it's a hedge. And it's growing fast enough that I think we should pay attention. Lucas: Agreed. And it dovetails with something else we've seen — the rise of local currencies and time banks. But barter networks are the most scalable version. Look, if walking through the economy with us has made something click, and you want to help keep this show ad-free and independent, listeners can support us at buy me a coffee dot com slash fexingo. No pressure, genuinely — just a way to chip in if the conversation adds value for you. Luna: Yeah, it's a small way to keep the lights on and the insights flowing. We really appreciate those who do. Lucas: So back to barter — one thing I find fascinating is how it's spreading beyond small businesses. We're starting to see mid-sized manufacturers use barter to offload excess raw materials. A plastics company in Ohio, for instance, traded a truckload of polyethylene resin to a packaging firm in exchange for machine maintenance and forklift repairs. Luna: That's smart — turns idle inventory into operational savings. And with supply chains still fragile, having that flexibility matters. Lucas: Right. And the trend might accelerate if the Fed holds rates higher for longer. The current unemployment rate is 4.3 percent, and initial jobless claims just ticked up to 215,000. The labor market is still decent, but wage growth is slowing. So households feel the pinch, and businesses look for creative ways to stretch revenue. Luna: Especially since energy inflation has been stickier than expected, as Fed's Goolsbee noted. That extra $450 per household from the Iran conflict — it's a real squeeze. Lucas: Exactly. So barter becomes a logical adaptation. Historically, it spikes during periods of monetary uncertainty. In the 1970s, barter clubs multiplied. In Argentina's hyperinflation of the 1980s, barter networks became essential for survival. We're not near hyperinflation — core PCE is running at about 2.8 percent year-over-year — but the psychology of inflation is powerful. When people feel their dollars buy less each month, they look for alternatives. Luna: It's almost a vote of no confidence in the currency, at the margin. Lucas: In a mild way, yes. But it's also pragmatic. The question is whether this barter boom will persist if inflation eases. My guess is that some of it sticks — once businesses build those relationships and platforms, they're useful even in good times. But the current growth is clearly crisis-driven. Luna: Alright, so if a listener wants to explore this, what's the first step? Lucas: I'd say check out the IRTA website to find a reputable network in your region. Talk to a few members, understand the fee structure, and start small. Trade something you have excess of — even if it's just an hour of consulting time. And keep good records for taxes. But don't expect it to replace cash flow entirely. It's a supplement, not a solution. Luna: Sound advice. It's fascinating to see a 1970s tactic get a 2026 digital makeover. Lucas: And it tells us that people adapt. Stagflation squeezes, but it also sparks innovation. Barter is one of those quiet, grassroots responses that doesn't make headlines but reshapes how commerce works at the edges. And sometimes the edges become the center. Luna: Worth keeping an eye on. Thanks, Lucas. Lucas: Thanks, Luna. That's our show for today.