Sunday, May 11, 2014

Cash Money Beats Electronic Money after a Disaster - For a While

Written by Ken Jorgustin at Modern Survival Blog

Cash is King. At least it will be, for awhile, following any disaster or collapse – until such time that it is not.
Having a quantity of cash on hand, both in your wallet and stashed in a safe at home, will be invaluable for awhile after any disaster.
Here’s’ why:
Almost all of today’s current money supply is electronic. Digits, computer data entries, one’s and zeros. Cash on the other hand is real and tangible (and essentially untraceable). Real to the extent that fiat currency is real…so long as people accept it as currency exchange for goods and services, and the accepted value of said fiat ‘paper’ at any give time…
Statistically, only a very small fraction of today’s money supply in the United States is actually physical cash or coin. This is known as the ‘M0′ Money Supply. Although the real percentage is elusive, it (cash) is apparently quite less than 10% of all ‘money’.
Nearly all of the transacting that occurs in day-to-day purchases are electronic digits. Invisible.
Having said that, imagine the consequences of commerce if the electronic systems that allow us to purchase our goods and supplies comes to an abrupt halt (for whatever reason).
If the power is out and electronic transaction systems are offline, many high-profile stores will not be able to accept ANY form of currency – even cash – because their corporate networked registers and computers are required for their record keeping and transactions. Besides, most kids can’t count change anymore anyway ;) (Apologies to those kids who can)
However, many smaller businesses and/or local merchants will take cash, because they don’t have the same requirements to network and report to the corporate ‘mother ship’ via computer, etc. And most of them can count cash and make change.
So, in the time following a disaster or collapse scenario, there will be places which will accept your cash – even though the electronic systems may be down. Cash will be King. For awhile.
If we’re in a worst case scenario and systems remain down while we descend into SHTF, then cash will lose it’s purchasing power to tangible and ‘needed’ real-world practical assets – whatever they may be. But before then, and for any ‘short term’ disaster, cash will be king.
For thousands and thousands of years humans have also valued silver and gold as money – so if you already have the preps you need and are looking to preserve excess wealth, consider having some precious metals (in your possession) and/or for post-collapse transactions for those who will accept it as for payment of goods, supplies, or services. No you can’t eat gold (or silver), but it has it’s place in human civilization.
Given that today’s ‘savings’ interest rates are near zero (due to the FED’s permanent zero-interest-rate-policies), there is little to no reward for keeping money saved in the bank. In fact (and unfortunately) keeping ANY cash or savings is a losing proposition to the ‘real’ rate of inflation (food and energy, etc.) which eats away at any cash that’s sitting there.
HOWEVER, keeping some cash on hand is an insurance policy that is worth the value lost each year due to real inflation. It is essentially the cost of your ‘insurance’.

No comments: