A few friends and I were having coffee and chatting at the local coffee shop yesterday, when one of them asked this: What if the entire financial system went blooey right now? Like, all banks and investment firms and stock markets and credit cards and venmo and all such things just got super-hacked or whatever, and all you had was the actual cash you had on you, emergency stashes, etc? How long would you be able to keep going?
We know the utter chaos would make this a nonsense question, but we got into it. We decided that ‘genuine’ cash retained its full value. A few ‘valuables’ like gold and silver would be worth whatever they currently are. Other ‘valuables’ – like jewelry – might be worth 10% of whatever you paid for it, but land/buildings and especially “collectibles” and “art” would be worth nothing in the immediate moment. One woman insisted her grocery coupon stash would retain full value. (Hah.)
So we counted up the actual cash each of us had in her purse, and decided we were all screwed.
Out of curiosity, though, I did some checking around at home. We do have a couple of trivial ‘stashes’ of cash for emergencies, like, oh, unanticipated pizza deliveries or buying whatever when kids come around selling popcorn and such. So I counted them, plus I remembered I had eight bucks worth of $2 bills from when I used to tuck them into birthday cards to family kids. I also have $3.50 in Connecticut quarters just because I always thought that was the only state quarter design that looked decent so I drop them into a particular vase ‘just because.’ It would have been a higher total a year or so ago, but I’d finally talked hubby into hauling several jugs of random coins off to a coinstar machine, but that was then not now. Final count: just a bit over $325.
In other words, we could have one more meal at a ‘nice’ restaurant, or possibly enough groceries for a month if we shop carefully.
It’s kind of shocking how little roll real cash plays in our lives.
So, how about you? Are you cash rich or one of us soon to be starving hordes?
To answer your question: Pretty cash poor. Maybe a thousand dollars or so in cash and 10% value jewelry assets.
In reality: If the banking system collapses, cash money will be worthless anyway and I’m not optimistic about trading a gold ring for chickens. On the plus side, if it was a temporary glitch (say, a week) and not a full collapse then we’d ride it out with cash on hand provided society doesn’t become anarchic looting hordes in the meanwhile.
We’ve done the “How much cash do you stash” a few times. Usually as an offshoot of “How much cash do you carry or spend in a week / month.” Here’s a recent example:
I usually have a small stash on my person, a larger one in the car, and a larger yet one at home. Setting aside the unreality of the overall set-up I could buy basic groceries (and only basic groceries) for much of a year. OTOH if I also had to pay rent & car payments and … then I’d be broke before the month ended.
I have cash on hand, but in a financial system collapse cash would likely be worthless. precious metals like gold may become worthless too. We may just end up bartering useful things like food, ammunition, camping supplies, alcohol, etc as an informal economy.
One would hope that if the financial system crashed so completely that would include the ability of banks to demand your monthly payments (although I am sure they would try).
If the collapse is complete then I think we are talking about a barter system taking hold. Cash would be worthless (see Germany after WWI). I’m not sure what I have to barter. A few things like electronics and furniture but not sure that would be worthwhile if the economy tanked completely.
I’d probably be screwed. The best off would be farmers and ranchers.
Years ago, I read “Alas Babylon”, and the beekeeper in that community had the most valuable thing. He was a nice person, too, so he was giving away the honey, sometimes. I think people did give him things he could use, though. In that case, his bees were being exposed to radiation, and that wasn’t good, though. Perhaps I should give that book a re read.
Worst case scenario, I’d make it a couple of months. But if the financial sector collapses and I can stop making my mortgage, medical insurance, and car insurance payments, that extends a lot longer. Of course, if people stop paying for medical insurance, insurance companies stop paying for doctors and medicine, etc., etc. I don’t make it very long at all in that case.
I’m trying to figure out how everything could go kablooey to such an extent that it could not be rebooted/reset. I would imagine that if it happened, there would be some immediate provision of issuance of IOUs or something for necessities such as food, with other transactions simply having to wait.
Personally, it is rare for us to have >$100 cash on us, so if cash were needed, we’d be fucked pretty damned quick.
We probably have a couple grand in liquidity (by the OP’s definition), but I also have the means to acquire more (guns & ammo). Not that I would, but we’re talking extreme circumstances here.
It’s nonsense to think that in this scenario the nice people at the power company will keep the electricity on just because, or that the nice pharma company will keep sending your insulin on trucks driven for free using free gas, or that window-smashing won’t start immediately.
I agree that cash on hand won’t make much difference. “How long could you survive in a barter economy?” might be a more answerable hypothetical.
For me, I think it would depend on the extent to which the rule of law broke down along with financial systems. I’m in Hawaii on 3 acres of land, which makes basic survival within the realm of possibility. Much tougher if you live in an urban high-rise and can’t produce much of your own needs.
If I were allowed to retain ownership of my property, I’d probably manage, as we produce a substantial amount of fruit and vegetables and do a lot of composting (so being unable to buy fertilizer wouldn’t be catastrophic). We have solar panels for power, access to river and rain water (and might barter for creating a catchment), and an electric car. We wouldn’t have enough protein if only consuming what we could produce, but I’m sure we could barter for fish (and we might start keeping chickens). Not to mention the nearby rancher we get beef from.
So, in theory we’d be okay, at least until we became too infirm to do the physical labor required to produce enough food for ourselves and bartering.
But I sort of think that if the world really broke down to that extent, eventually we’d be pushed out by younger, hungry, desperate people who wanted our land. Especially given that we are outsiders. Native Hawaiians, and descendants of people brought here to work the sugar cane fields, might understandably think we didn’t have the right to keep our land to ourselves. I wouldn’t even disagree, necessarily, though I would hope we could come to some kind of agreement that let us all survive if possible.
I’d assume a total collapse would take the utilities with them. No electric, no gas, no gasoline (it presumably takes electricity to get the gasoline from the underground tank to the pump at your local gas station), and only the water that you’re downhill from, so fill up your bathtub immediately.
I’ve got about $370 in cash on hand at this moment, but I wouldn’t count on it being any good, and anyplace that sells food (groceries, convenience stores, Wal-Mart, what have you) would probably be looted in short order.
We’ve got a well-stocked pantry, and a chest freezer and a second fridge in the basement, the contents of which will go bad at varying rates. There’s also the question of where I’d cook anything that needs cooking, since our stove is electric. We’ve got a gas grill on the deck, and I’ll WAG that its propane tank is half full. So the first errand would be to the gas & go where I turn in empty propane tanks for full in the hopes of buying an extra tank or two, or just grabbing them if nobody was on hand. (They’re not just loose, I’d need a crowbar to get into their cage.)
After that, I’d barter with neighbors, hoping to trade frozen foods for less perishable stuff.
We probably have enough food to last a month, even given the prospect of spoilage. We’d probably run out of water and canned/bottled beverages first.
I always have rice and pasta in the pantry but unless I can cook it I am not sure it is of any use (can a human eat uncooked rice or pasta and get nutrition from it?..if I am starving I am sure I would try, not sure it would help). Even if I could eat those staples they’d probably not get me through more that a couple weeks (if I carefully stretched it out).
Not only is it unrealistic, We have actual examples of what actually does happen in such situations. And in my experience, people don’t immediately start tossing trash cans through store windows.
First of all, what event would even cause “the entire financial system to go blooey” such that the value of all financial instruments, debt, and accounts went to zero or near zero? You can rest assured if all that valued was destroyed, the value of your physical currency in your pocket wouldn’t be worth much more.
So the question is really "how much cash do you have on hand if the power/internet goes down and you can’t use your credit cards, Venmo, or get cash out of an ATM?
Hmmm…I had never given it much thought, but my in-laws have an interesting tradition that would help me out in a situation like this. Every family member gets a new mint condition US silver dollar at Christmas. My wife and I get two, my BIL and family get four, and so forth. Of course, nobody does anything with them other than to put them in a drawer or safe, since they are intended as keepsakes for that year. I’ve been in the family for over 40 years, so you can do the math. (Silver is about $80/ounce right now, so each is worth that just at melt price.)
