I assume Y2K will bring numerous banking problems and even some bank failures. Other than removing cash from my bank, what is the best way to ensure that it will still be there when this is over? I have considered withdrawing my money in the form of a bearer check but I do not know if such a check is valid in the event of failure of the issuing bank. What is the relative safety of a savings account or checking account compared with other forms of holding cash in the bank, such as a CD? I have not seen this question addressed anywhere. Ron Rypel

-- ron rypel (ronrypel@msn.com), October 27, 1998

Answers

Take the money out as CASH. If you need a place to put it, place it in a safe deposit box at the bank. When the bank panic starts (hopefully overseas), take the money out of the safe deposit box.

If you have too much money to hold in cash, buy some gold or silver coins.

Do not tie up you money in savings or checking instruments. That is the danger we are all talking about.

-- David Holladay (davidh@brailleplanet.org), October 27, 1998.

Your money will not be able to buy anything. why are you so worried about how you are going to hold some green paper.

Mongo

-- Ron (mongo@earthling.net), October 27, 1998.

Your question seems to read: If banks are OK, what's the safest way to keep my money in the bank. In this case (bump in the road) probably any form of cash in the bank is as good as any other. The question is, what might happen to the bank(s). A few scenarios:

1) Banks will be fine as soon as the power and/or communications are restored. In this case, best to have a useful wad of currency under the mattress to last as long as things are down. A steady, inconspicuous withdrawal of greenbacks is strongly recommended. At today's interest rates, you won't lose much.

2) The banking system is OK, but *your* bank did something awful or failed to do something essential and zorched their records. In this case, if you have kept complete records of everything, you'll probably be able to get your status restored someday. In the meantime, you live off your mattress stash.

3) The banking system fails, even if your bank is OK. In this case, getting at your money is problematical, and at best will probably take detailed records and a long time. At worst, you're broke. Mattress again.

4) Widespread failures of both public and private organizations cause the economy to suffer seriously, even if the banking system is fully remediated. In this case, most bank loans fall into the 'nonperforming' category, never to return. Bank failures are epidemic. The FDIC can't cover even a small fraction of deposits. Your money is gone foreer, and your mattress holds everything you own. Another Great Depression, only moreso.

5) The collapse of the infrastructure, the economy and any effective government causes (the surviving) people to lose faith in paper currency. In this case, your net worth consists of things you have with intrinsic value -- food, tools, bullets, a water well, seeds, etc. Gold (physical gold, not paper assurances that you 'own' some gold somewhere) may or may not have value as a medium of exchange. Maybe you can burn the mattress cash to keep warm. Blacksmith skills are ideal; suicide is a viable alternative.

Up to you -- pick one or dream up your own and go with it. But be aware that the fractional reserve system makes banks very sensitive to any rapid economic fluctuations, and the probability of that looks disturbingly high right now.

-- Flint (flintc@mindspring.com), October 27, 1998.

Ron: I agree that if there's no goods to be bought, then why have cash? Your goods will be worth more than cash. I believe there will be a lot of batering going on. If the electrical grid goes down, that means EVERYTHING else goes down with it. No power to manufacturer goods, no gasoline to power tractors for farming, etc. You cannot buy what is not available. Your money would be worthless regardless of how much you have. You can't eat your money. This is a worst case scenario. Since we don't know how it will roll out, and it's a medium crisis, then having some cash stashed would be prudent. Just cover all your basis. If you have cash now, spend to meet your own survival needs and then some on bartering items. I'm buying 25 5/lb bags of sugar for 99 cents ea. I'm not a big sugar user, but if nothing happens, I can fill my hummingbird feeders for years.

-- bardou (bardou@baloney.com), October 27, 1998.

Good post Flint.

Best suggestion: Buy what you think you'll need now why it is available and relatively cheap. Bob

-- BBrown (peace2u@bellatlantic.net), October 27, 1998.

A $10 bill or a roll of toilet paper? I know it's anal, but t.p. is the cheapest barter item needed by all. Stores in your attic nicely and you can use it if y2k is a bump in the road.

-- Bill (bill@microsoft.com), October 28, 1998.