Posted on 10/11/2017 9:43:03 AM PDT by markomalley
When Hurricane Maria knocked out power in Puerto Rico, residents there realized they were going to need physical cash — and a lot of it.
Bloomberg reported yesterday that the Fed was forced to fly a planeload of cash to the Island to help avert disaster:
William Dudley, the New York Fed president, put the word out within minutes, and ultimately a jet loaded with an undisclosed amount of cash landed on the stricken island...
[Business executive in Puerto Rico] described corporate clients’ urgent requests for hundreds of thousands in cash to meet payrolls, and the challenge of finding enough armored cars to satisfy endless demand at ATMs. Such were the days after Maria devastated the U.S. territory last month, killing 39 people, crushing buildings and wiping out the island’s energy grid. As early as the day after the storm, the Fed began working to get money onto the island,
For a time, unless one had a hoard of cash stored up in one's home, it was impossible to get cash at all. 85 percent of Puerto Rico is still without power, as of October 9. Bloomberg continues: "When some generator-powered ATMs finally opened, lines stretched hours long, with people camping out in beach chairs and holding umbrellas against the sun."
In an earlier article from September 25, Bloomberg noted how, without cash, necessities were simply unavailable:
“Cash only,” said Abraham Lebron, the store manager standing guard at Supermax, a supermarket in San Juan’s Plaza de las Armas. He was in a well-policed area, but admitted feeling like a sitting duck with so many bills on hand. “The system is down, so we can’t process the cards. It’s tough, but one finds a way to make it work.”
The cash economy has reigned in Puerto Rico since Hurricane Maria decimated much of the U.S. commonwealth last week, leveling the power grid and wireless towers and transporting the island to a time before plastic existed. The state of affairs could carry on for weeks or longer in some remote parts of the commonwealth, and that means it could be impossible to trace revenue and enforce tax rules.
Note the deep concern with "trac[ing] revenue" and "enforc[ing] tax rules" — as if making payroll for ordinary people were not the real problem here.
Puerto Rico has been fortunate that the United States, so far, has not attempted to implement many anti-cash measures that have been popular among central bankers in recent years.
Abolishing cash, of course, has become de rigueur among mainstream economists who have long argued that physical cash is an impediment to "nontraditional" monetary policy like negative interest rates. Moreover, advocates claim, physical cash makes it harder to control the flow of money, collect taxes, and control black markets.
This drive to supposedly fight crime and corruption was given as the justification for the disastrous war against cash in India in 2016. Hatched as a scheme to assert more government control over the economy, the Indian government removed mostly large bills from circulation in India, which accounted for 85% of its physical cash by value.
The demonetization badly damaged the economy. The Wall Street Journal reported in December:
Not surprisingly, shock waves from the announcement continue to crash through the economy. The Asian Development Bank cut its growth estimate for India for the financial year ending March 31 to 7% from 7.4%. JP Morgan expects growth to decline by half a percent to 6.7%.
Meanwhile, falling sales have begun to translate into layoffs spanning various sectors, including construction, textiles and jewelry. The Centre for Monitoring Indian Economy estimates the transaction costs alone of swapping out an estimated 14.2 trillion rupees’ worth of currency to be 1.28 trillion rupees, or about $19 billion.
India’s economy will eventually recover from this self-inflicted wound, but there’s no question that demonetization has created doubts about Mr. Modi’s competence. The decision, reportedly hatched in secret with a coterie of trusted bureaucrats, showcases the prime minister’s faith in the command-and-control ethos of the civil service rather than in the “minimum government” he once promised.
One can only imagine how much more grim matters would be for Puerto Rico if most physical cash were made illegal as happened in India.
It's unlikely, however, that any well-known economists — such as Kenneth Rogoff who has deemed physical cash "a curse" — will be recanting their anti-cash views.
If you want to make an omelet, you have to break some eggs, and while some of the "little people" like Indian peasants and Puerto Rican workers might have to suffer greatly whenever the power goes out, we all have to make sacrifices.
Perhaps this is what Richard Thaler — the newly announced economics Nobel-Prize winner — had in mind when he came in out in favor of demonetization in India.
Certainly, abolishing cash is likely to devastate a poor economy more than a wealthy one. A wealthy country, with more advanced and reliable infrastructure, and with greater access to resources in general, is more fully able to weather a shortage of physical cash, and natural disasters. Overall, though, going cashless makes an economy more fragile, and makes ordinary people sitting ducks whenever there is a natural disaster, or even worse disruptions such as wars.
I suggested that already, or a hand cranked charger or a camp stove charger.
My reply was in response to someone insisting that nobody used their cars to charge their phones when I know good and well that a lot of people do that.
Those who advocate cashless can go to hell. It’s nothing more than a way for the government to efficiently take whatever the hell it damned well pleases from those who earn money, and give it to those whose a$$es it kisses in return for votes.
OK, thanks. Requested it.
So either way, in a TEOTWAWKI event, as what happened to Puerto Rico, people are going to run out of cash money very quickly. As most people will be in the same boat, alternative methods of payment will be improvised.
One of the recommendations is that in addition to food, water, and medical supplies, that you have a supply of $20 bills (probably a two to three hundred dollars worth) to allow you to survive after a natural disaster.
The days of 3 days, three ways are over. If there is a big enough disaster many are talking about two weeks before you can count on things working again and that is not in a remote area like an island. While cash might not do anything in the first few days, it will likely help once some of the infrastructure starts coming back on.
The premise is silly on its face.
In a cashless society, all goods and services become cash.
Cash is only a method to harmonize what is, essentially and still, a barter economy.
Also nonsense from the 'mainstream' economists.
Negative interest rates are far from nontraditional. They thrive in any deflationary economy.
Whitley Strieber...
THE UFO GUY?
At a future date; the 'power' involved will NOT be electricity!
And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.
Revelation 13:17
Easy to say; but just HOW would it work?
Gotcha a solar power thingy or a hand cranked generator now?
Alfred E. Neuman works for me.
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