Tuesday, December 25, 2007

Emergency Cash

One thing that you'll see pop up a lot in "survivalist" discussions is the worthlessness of cash and the practicality of material possessions. According to some people that you talk to if something really big happens then cash will be worth about as much as toilet paper while things like silver, ammunition and food will be worth their weight in gold. Every time I read things like that I roll my eyes. I do believe that things like silver, ammunition, gold and a lot of other extremely useful items that we take for granted will be highly valued. I also believe that cold, hard cash will be accepted before any of those in the early stages of any kind of societal crash. Since birth we have been conditioned to accept cash as a form of payment. In my opinion it'll take a HUGE disaster for money to become worthless. They have turned it into a commodity in and of itself due to the difficulty of counterfeiting it.

Our money is almost impossible to counterfeit. It won't take all that much for your money to become extremely hard to get to, though. One thing that you have to realize is that about 90% of the money in the world (if you go by the bank balance sheets) is virtual. In reality, considering the games that the banks are capable of playing with their balance sheets, a LOT more than 90% of our world's money supply is virtual. It's just a number on a computer screen. You can have $500,000 in the bank but that doesn't mean that you have $500,000. First of all the FDIC only insures your balance up to $100,000. I welcome anyone with $500,000 in their bank account to walk into their local branch and try to close your account and demand cash. The bank won't have enough money on hand and they'll definitely request that you give them time to get the money. Now imagine if 50 people with a combined total of $500,000 decided to go to the bank on the same day and withdraw that much cash. It's a lot easier to tell one person "sorry we don't have that much cash handy" than it is to tell 50 people the same thing.

Enter the survivalist's emergency stash. What, exactly, does this stash consist of? It consists of cash on hand. How much should you have, though? I've seen recommendations that range from whatever it takes to get you out of town to six months worth of everyday expenses. I say keep whatever you can afford. Just make sure that you're honest with yourself when you decide on what you really can afford. First of all make sure that it's cash. That credit card that you never use with a $1500 limit might be worth something now but what if the machines shut down? How are those or any of the other credit card style gift cards that you got for Christmas going to be redeemed? Even if you just keep a $2,000 emergency fund in an obscure bank account do you really feel that it's safe? There is nothing more safe than having cash in hand before the shit hits the fan.

I just got about $150 in cash for Christmas. Now I could have gone out and blown it on things that I wanted. After all the money was supposed to be the equivalent of several Christmas presents. Instead I chose to add it to my stash. That stash will be easily accessible for me. If I need to get to it then I won't need to worry about the banks freaking out when I go to withdraw "such a large sum of cash". I'll already have the large sum of cash on hand. If by some miracle someone actually makes it in and out of my house without getting shot by me or my wife or without getting mauled by my dog after by some miracle actually finding said stash then I guess that they're just as entitled to it as I am. If you intend to keep cash on hand then please take precautions.

It will take a HUGE crash to stop money from being taken as payment for anything. If things get so bad that everyone is running to the banks to empty their bank accounts then you'll be really happy that you've got a few grand sitting at home.


theotherryan said...

I agree very much with your post. Imagine that you need to leave town ASAP because of an imminent natural disaster, the odds are that the gas stations is not going to take payment in .45acp rounds or junk (not old us coins) silver. I suggest the following when it comes to cash on hand. Follow The Urban Survivalists advice but limit the amount you keep on hand to just under what you would be able to loose without a big problem. I know a guy who keeps 15,000 dollars in cash at home. That is pretty excessive in my opinion. I think about a months worth of normal expenses (rent, utilities, food, etc) is realistic and wise. In a perfect world having a few months more in a seperate bank account is wise and enough to get through almost any of lifes financial disasters.

fallout11 said...

Well said.
I personally keep $1500 on hand in what amounts to a hidden, fire-resistant location. One other note.....save small bills ($5's, $10's). Change for large ones may not be available when you need it.
As always, your mileage may vary.

BigBear said...

I think cash will be useful in the short term but commerce will be moved to an all electronic format tied to a National ID as soon as the government can implemented it. That is the only way of tracking people purchases and who has what.

You should be willing to write off any money kept in an account. Those funds will be frozen or unusable because of a lock down situation. Marshal law will be implemented with the flip of a switch. To shut down this country and stop movement you only need to shut down the credit/debit network. No one keeps cash.

The Urban Survivalist said...

Awesome post bigbear. I wonder how long it will be before it's actually illegal to use hard assets to buy anything...

BigBear said...

I don't think the government will make cash illegal. That will cause a panic and it's to obvious.

There will be a bird flu outbreak or some other easily transmitted disease. The government will claim that for health reasons cash money should not be accepted because it can transmit the virus. They will ask you to take your cash to special exchange centers where you will be given a debit card and oh by the way it is also a National Biometric ID.

The public will happily accept this it is being ingrained in us even now. Think about those Visa Check Card commercials that show commerce stopping when someone tries to pay with cash or checks. Paper is becoming dirty.

ConsultantX said...

"I also believe that cold, hard cash will be accepted before any of those in the early stages of any kind of societal crash"

I think so, too. The time between something bad happening where cash is still king and the time cash may become worthless is anyone's guess, but I would expect there to be that period of time when cash is a necessity. To completely ignore cash over metals is ignoring that period of time.

Anonymous said...

I agree. Cash is a must, but it's also a good idea to stock things you can barter with.