It's good to have a few week's worth of cash to buy gas and groceries. However, if this goes past a few weeks, the cash will start to lose value.
Thanks - that is a valid opinion and I appreciate it.
I agree that yours is a probable outcome if "The Disaster" happens. The only problem I see is that most of our transactions today are not cash anyway - they are electronic. The banks could "close" - but then people will basically stop paying bills like their mortgage, car payment, insurance, utilities, water, sewer, property taxes, etc - because most people do that on-line and electronically these days. That is a major reason why the US Postal Service finds itself bankrupt with little revenue coming in.
Now - stores may say they will no longer take credit or debit cards, and only cash. But, the problem is we do not suffer from a lax of green paper money. Thanks to Bernake, Geitner, and Obama - we have Trillions and Trillions of newly printed paper money.
If the banks are forced to release the cash and the Fed prints even more of it, we will have hyper-inflation. If they don't release cash, and all electronic transactions (to include credit cards) are abolished during the "crisis" - we may have deflation, or something else.
The problem I have with these doomsday websites with the big headlines is they never give details like yours. The conversation always goes like this:
ZeroHedge: "Things are going to be really awful!!!"
You: "How awful?"
ZeroHedge: "Really, REALLY awful!"
ZeroHedge: "Let me show you my 42 minute PowerPoint presentation!"
You: "I don't want to see your PowerPoint presentation - just tell me when you think this Really Awful thingy will happen, and what specifically you think the economic disaster will entail."
ZeroHedge: "Subscribe to my Newsletter!!!!!"
I have an extra stash of cash for emergencies but wonder if that’ll help that much. With transactions stopped many stores will simply close. The food stores might stay open long enough to sell their perishables for cash but then what? If no one is able to pay bills, companies and agencies won't be sending out checks either. Even if they do the banks won't be open to process. After a short time only cash and a barter system will be in effect for the limited items available for purchase. Gas stations will sell gas for cash but experience assaults from panicked customers who won't accept cash only policies. Those with cash will be okay but only for a short time until stations begin to close completely due to civil unrest as customers desperate for fuel steal what's needed and more. Burglaries and robbery will go up as well and those with ammo might make it through a short time until chaos takes over entirely.
Won't be fun, that's for sure. But I still keep the stash. Hopefully it'll be of some help.
“What happens—two words. Bank Holiday. The banks will close to avoid runs.”
I doubt that. The rationale for bank runs isn’t what it was in the ‘30s. The FDIC, what Milton Friedman called the greatest legislation to come out of the Great Depression, makes a big difference.
The Bank Holiday of March 1933 was done in order to halt the bank runs that had been wiping out thousands of otherwise healthy banks.
The public was fearful of having their money in banks because when banks failed you lost all your money. There was no deposit insurance.
The collapse of banks and the resulting loss of their depositors’ money made the American money supply contract by a full 30% from 1930-33. This is the source of the great deflation of the 1930s.
When the banks reopened the Fed announced that it would back all deposit accounts with a 100% guarantee, creating a de facto FDIC. This restored confidence in the banking system, and soon after Congress passed legislation creating the FDIC.