Cashgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Various official agencies are recommending 2-4 weeks of cash. This causes a problem with fractional reserve banking, but will one need much cash in 2000? What would you buy if the stores are bare?
-- Rick Reilly (email@example.com), January 07, 1999
good point. i personally dont understand all the hoopla about having cash, gold, silver, etc. i say - CONVERT it beforehand into things one can survive on.
you cant eat cash or gold.
-- lou navarro (firstname.lastname@example.org), January 07, 1999.
There is not enough physical cash to cover deposits. In fact, there is no where near enough. Period. Many of us are looking to the future with the spectre of limits of cash withdrawals as one effort by the Feds to mitigate any potential bank runs. Panic will be faster. The advice to stockpile cash ahead of time, preferably in small bills for easier spending, is sound. If you can't spend it at a store that is empty, will your neighbor accept it? Would you? Many folks think so.Also, it is immediately recognizable as "money" by everybody.
Cash is liquidity. You don't have to turn it into something else to spend it. Think Barter also, not only of goods, but as a supplement to cash, which few people will have. Do you want to be one of those that has some? Remember also that a can of Danish Ham will always be worth a can of Danish Ham. (unlike a fiat dollar that can be devalued through inflation of the money supply, tangibles and consumer goods will hold there value if not increase in value). But cash still will have a place. We will have to use something as money, and we will barter too.
Regarding gold and silver: this is real, constitutional money, which most people don't have a clue about after 80 or so years of living under the iniquitous Federal Reserve credit monopoly. There are a couple of good threads about gold and Y2K in the Banking/Finance archives. Read them to get an understanding of what part real money can play in the Y2K scenario, and for a good background on the subject, complete with some links.
-- Rob Michaels (email@example.com), January 07, 1999.
I agree with Rob. Also, remember, initially at least even in the worst case scenario, people will be under the illusion that things will get fixed "in a while", so certainly cash will be completely welcome. You want to cover all the bases, and cash is definitely one of them. (If you have not seen the movie "The Trigger Effect", you ought to rent it. The first few days after electricity and communications go out [nothing to do with Y2K] gives a good sense of why cash is important. It gives you the ability to acquire any "last minute" items that are available, without question.)
-- Jack (firstname.lastname@example.org), January 07, 1999.
Gold and silver are a store of value. Someone worked to produce them and they are scarce. Food, weapons, ammo, toilet paper will be scarce, too. You as an "investor" have to decide, 1 share of Amazon.com or 50 oz. of silver or 1500 lbs. of rice? You decide, it's your future.
-- Bill (email@example.com), January 07, 1999.
One thing my father used to remind me was that you need to hold onto things after others believe they are worthless.
The prime example...
During the revolutionary war, war bonds were sold to people to finance the effort. Shortly after the war, most people sold thier war bonds for pennies on the dollar because they believed that no central government would emerge which would honor the bonds.
Many of the signers of the Declaration of Independence bought the war bonds for pennies on the dollar, then managed to get a government organized and eventually paid the war bonds off in full, yielding a handsome profit for those who bought them after the war (when everyone believed they were dust).
Just a "little" history lesson.
-- Glen Austin (firstname.lastname@example.org), January 08, 1999.
Cash isn't the first priority in 2000. In the first few weeks of 2000 the heat, water and food you've made provisions for are what will truly make the difference for you and family. Some cash will be helpful at this point, since using a credit card or being able to get a check verified could be out of the question.
Despite all the preparations you've made, though, there will be some things you forgot to get ahead of time. I expect a lot of shortages in 2000, but cash will be in short supply too. Having extra cash around, if you already have most of your supplies, will give you an edge over other people wanting to buy the same supplies you want to.
If Y2K turns out to be TEOTWAWKI (the end of the world as we know it), cash could gradually lose its glamor with the public if the public identifies it with the system they know won't ever be returning. Cash is not backed by gold anymore and is only worth what faith people have in it and in the system.
In a TEOTWAWKI scenario, barter goods, gold and silver will be the most useful. I like inexpensive but practical barter items such as toilet paper and blue tip matches. Barter items like this could be worth much more than what you paid for them, and can be used either for your own family's use or for barter. If Y2K is a six-week "bump in the road," you can still use these items in the following year or two.
Silver and gold, in my opinion, don't have much use unless you're fairly certain there will be a long-term TEOTWAWKI situation. Gold and silver are a good way to preserve your wealth in concentrated form. It's hard to have these metals in small enough amounts, though, to make daily purchases. They would be good for large purchases a few months into 2000 if things do turn out to be that bad.
One other advantage of cash is that, in the near term, it's value could increase due to deflation; that is, few goods available, but even fewer people with jobs and pay from those jobs. If electronic money dies, the nation's money supply will severely contract, and what little cash is available would appreciate in value.
Let me look at your questions again. "Will one need much cash in 2000? What would you buy if the stores were bare?" Are you asking if having cash is a high priority like having preparation supplies, or are you asking if there is much point in taking it out of the bank or stock market?
If you keep a lot of your money in the stock market, it will almost surely lose much of it's value, even before January 2000 hits. Having it in the bank is iffy. In the bank it will be difficult to access in early 2000, and if there's TEOTWAWKI, your money would cease to exist.
Another angle to consider is if there will be a full-blown depression in 2000, which I consider very possible. If you don't have a job, you will have to have access to your wealth. If most of your wealth is in the stock market now, you will lose it. If it's in the bank, you may or may not lose it.
This is a difficult subject to discuss, because a lot depends on your own personal situation, and also what you believe Y2K will do to the system in 2000. If you're a working Joe who lives from paycheck to paycheck, arrange for heat, water and food and don't worry about cash, barter items, and gold and silver. If you have some money, then you can also set aside some cash and barter items. Don't think about silver and gold unless you've taken care of all the other basics first.
Just one other thing to keep in mind--you don't have much time left to make a decision about these things. Cash will most likely be in short supply in the second half of 1999 due to public panic. Don't count on being able to buy things like kerosene heaters and winter clothing in the fall of 1999. If you have money in the stock market, well, I guess I don't have to tell you that it's legal gambling and that it could go way down anytime, even without Y2K.
I suspect public concern over Y2K will have a notable effect on the stock market by this summer, maybe even as soon as April. Make your choices carefully, and remember that your decisions will depend on things such as the weather in your part of the country; how much savings you have now and what you keep your savings in; your family situation; and how much you are willing to do if you believe Y2K's effects will be moderate and that "the world as we know it" might come back in a few months.
-- Kevin (email@example.com), January 08, 1999.
A method of exchange beyond bartering is certainly necessary. It's a pre-requisite for any society to succeed. If we are to come through a teotwawki, we need to work with that premise. Everyone needs a means of obtaining goods and services beyond what the seller may personally required in exchange. The seller takes this medium with the full expectation that he can pass it along to people who have what he himself needs. Not only is it universal, it is portable.
Even primitive societies recognize this. There are those who have dropped the portability benefit, by using giant carved stone wheels (that not easy to counterfit) to represent their collective wealth. No one can even move these stones much less take home with them. Portions of these stones are "owned" by various members of the group and everyone in the group knows where the stones are and who has what portion of them.
Early on in my awareness, I read that Ithaca NY is preparing for y2k in several ways. One being that they will issue some form of local currency, if necessary.
Gold and silver are non tarnishing, non oxidizing, non rusting metals that are used as the standard of wealth simply because they do not change their states. They will always be in demand as they have been since the beginning of recorded history and, no doubt, before. They are easily melted and remolded into small units. Silver for instance can be bought in one oz. ingots for the current price plus a considerable premium for being produced in that size. 100 oz. ingots can be remolded at home into 1 oz pieces without paying the premium. The value they will have after y2k is moot. If the y2k impact is great enough, they will likely find their own trading level, depending on the area of the country, etc. and not be based on anything that is current at all. But one thing is certain, there is a faith that people have had in these metals, all across time, that will keep them good for use as an exchange medium, no matter what senario arises.
-- Floyd Baker (firstname.lastname@example.org), January 10, 1999.