Since I did not live through the depression and actually am not knowledgeable about much in the world of finance, I am wondering about our currency if the banks collapse? If one were to withdraw a considerable amount of money from the bank, would it be wise to keep any of it in paper? People are being advised to buy gold and silver in large amounts which makes me wonder even more. Also, if a person wanted to get out of the stock market, could he exchange the stock for gold without actually "cashing" it in? My family would appreciate some answers to these questions. Thank you. Mary

-- Mary (SWEEP@prodigy.net), February 07, 1999

Answers

Mary: if y2k is a 10, your bank notes will come in handy as bum wipe and bird cage lining. Get the picture?

-- a (a@a.a), February 07, 1999.

If it's a 10, given the fact that 98% of money is electronic, the 2% of cash would suddenly be very valuable (supply & demand). People would buy and sell with green backs out of habit. But if things were really that bad, after a while people would begin to realize that it's just paper with nothing backing it up (not that there's anything backing it up today, it's just that few know it). At that point, cash will come in handy to get a fire started in your wood stove, and precious metals and tangible barter goods would be the new currency.

-- rick blaine (y2kazoo@hotmail.com), February 07, 1999.

Nope - disagree.

Paper money will be worth exactly what you can for it at the time of the transaction. Even in the extreme hyperinflation of germany in th early twenties, paper money had some value. The value is decided by the custoemr/merchant receiving the money, based on what they think/expect they can do with it.

If they think they will be able to use it later (even in a Milne-worst case scenario) they will accept it from you.

If not, no. But barter isn't efficient nort effective in the long term, nor can you give change in for a 1/2 gallon of gas in 1/4 eggs or 1/2 hog amounts. Some form of money and an exchange rate will be found.

-- Robert A. Cook, PE (Kennesaw, GA) (cook.r@csaatl.com), February 07, 1999.

I think Rick pretty well nailed it. What dollar value would you asign to a months food when there is no more to be had and your family is starving?

-- Nikoli Krushev (doomsday@y2000.com), February 07, 1999.

Rick - I think all 3 of us replied real quick there. My "nope" referenced a@a's answer, not your's.

-- Robert A. Cook, PE (Kennesaw, GA) (cook.r@csaatl.com), February 07, 1999.

a, I think that bird'll be on the table before its cage can be re-lined...

-- Blue Himalayan (bh@k2.y), February 07, 1999.

Not everyone can afford gold. As a matter of fact, only a small portion of the population will purchase gold and silver. You can't eat gold and silver, however, having some will not hurt. I won't turn down your gold if I have something you want. I'm betting that my neighbors that are in close proximity, will be wanting some rice and beans. I know they don't have gold, but they do have other items that I will barter for. It's amazing what people will give you when they are hungry.

-- bardou (bardou@baloney.com), February 07, 1999.

Good meditations on this issue:

Metals, Currency, Consumables, and the Post-Crisis Migration of Values, Parts I and II:

http://www.provide.net/~aelewis/gold/crisisv1.htm

http://www.provide.net/~aelewis/gold/crisisv2.htm

-- Alan (a@b.c), February 07, 1999.

I've been buying "quarters" at the bank. Just take in $500 and ask for a box of "quarters". The teller doesn't ask why or for my account no. If things get bad {as I believe they will], I'll have some kind of cuuuency to buy with, and very close to the exact change. Can always act as if I just had a little of the old coins around. Don"t think it will attract very much attention. If I tried to buy something with gold or silver or $20 dollar bills someone might follow you home. Could be a lot of counterfit money on the scene too. Just don"t want to draw any attention. If its a little bump in the road I just turn them back in for some green backs.

-- thinkIcan (thinkIcan@make.it), February 07, 1999.

Or go to a casino near you and cash it in there! If your holding lots of cash, what better way to unload it but in Las Vegas, Reno, Tahoe, etc. Load you car trunk up with the coins, carry a casino bucket to your car and cash those babies in! Cha Ching, Cha Ching. P.S. Look at all the time you save rolling those coins to cash in...no questions asked. Want coins, take $100.00 into a casino and ask for quarters, they'll love you! Give you all you want! No banks to hassle with, no questions asked!

-- cahching (chaching@cash.com), February 07, 1999.

just remember that if a cop pulls you over and for whatever reason and catches you with $1000 bucks or $1000 in quarters you will automatically be labeled a drug dealer and lose it all to the "authorities". that many quarters can only mean you are making a lot of phone calls from phone boothes.

-- ed (edrider007@aol.com), February 07, 1999.

24 rolls of Charmin or a $5. bill? You tell me which will be worth more in the event no more Charmin is available.

-- Bill (y2khippo@yahoo.com), February 07, 1999.

Druggies don't deal in quarters they deal in bills. So what if you get stopped, tell the cop you've been saving those quarters for 10 years and your going to get rid of them at the casino. Or don't do anything stupid to get caught with a bunch of cash. Take Grandma with you and tell them it's her life savings!

-- chaching (chaching@cash.com), February 07, 1999.

P.S. Druggies use pay phones but with calling cards, or they use cell phones with coded communication (they are rich remember). Quarters aren't in their vocabulary. Too heavy to carry around and too hard to cash in...too cumberson.

-- chaching (chaching@cash.com), February 07, 1999.

tell it to the judge three or four days after you been sitting in a cell waiting for your turn. and tell it to your lawyer as well. after you've paid him to plead your case, of course.

-- ed (edrider007@aol.com), February 07, 1999.

That's it-----When I go to buy my 2000 "quarters" on Monday, if the bank asks me what I'm want with 500 dollars of "quarters" I'll just say I'm going to Vagas, and I want to use my own "quarters". On a serous note, I would never go to Vagas and pick up, or take out a substantial number of "quarters". Too many eyes watching, both human and electric. Do not draw attention to yourself. This is not a game, people are going to die and I'm not interested in being one of them.

-- thinkIcan (thinkIcan@make.it), February 07, 1999.

Mary,

Even in the worst depressions, the previously prevailing currency continued to prevail. And, as was mentioned, its value often (usually) increases.

What causes a currency to lose value is usually either one of two things: the issuing agency prints it in rapidly increasing quantities (i.e. inflation), or an armed invasion leads to its replacement by the currency of the invaders.

Gold and silver bullion may be good investments during a period of rapid inflation, but not so good during a depression, and gold and silver coins today have too much premium as collectors' items to be good investments as currency, since as currency, they would lose the collectors' premium.

If things get so bad that "martial law" is invoked, all bets are off. Any assets of any kind could be in jeopardy.

If things do get really bad, the comments about attracting attention with gold coins, or large denomination bills, are to the point. As far as potential counterfeit currency is concerned, strive to collect the newer bills; they are more difficult to counterfeit than the older ones.

In any case, if you do take (all/most of) your money out of the bank, consider carefully where to store it (perhaps some here, some there, and some elsewhere), and keep a tight lip about it.

If you choose to leave a significant amount of money in the bank, you might at least spread it out among two or more banks, whose headquarters are located in different parts of the country. Keeping at least some money in a checking account makes bill paying easier, and also enables you to point out, to anyone who may ask, that "of course I didn't take all my money out of the bank. What do you think I am, a (Y2K kook, survivalist, etc, take your pick)".

Good luck.

Jerry

-- Jerry B (skeptic76@erols.com), February 07, 1999.

So, you don't like my idea of the casinos to get quarters? How about hitting every laundry mat and car wash in your city? Are there cameras there too? What about kiddie arcades? I mean come on folks, if you want quarters, there's ways to get quarters! You want cash, there's ways to get cash! Start using your head!

-- chaching (chaching@cash.com), February 08, 1999.

Think legal addictions that may not be readily available because they come from far away. More people are addicted to coffee, tea and spices for flavouring than to the illegal stuff. Great for barter!

-- Watchful (seethesea@msn.com), February 08, 1999.

More people are addicted to alcohol than coffee, tea and spices. Stock up on those trial bottles of liquor. I'll trade you 1 bottle of Kessler for a couple hits off your pipe.

-- tokin (tokin@reefer.com), February 08, 1999.

a few years back there was an article in the newspaper about a house that was being remodelled. The original structure dated back to before the time of the American Revolution. After peeling off numerous layers of paint and wallpaper the remodellers discovered that one entire wall of what had originally been the owners study was papered with, well, paper money that had been issued by the Continental Congress - a.k.a. "Continental Dollars" which were fiat currency (hint: In the 1780's something valueless was referred to as "not worth a continental"). The original owner had been a Captain in the Continental Army and had used his pay for one of the few effective applications he could find for it.

Arlin

-- Arlin H. Adams (ahadams@ix.netcom.com), February 08, 1999.

I'm not quite sure what you have determined as to what you think is going to happen, but you did mention about the Depression.

I have been grappling with this issue as well.

When you read about the Depression there were still businesses and some people still had jobs and were paid with money. People still used money to buy things with.

I'm not sure what is going to happen with Y2K, but if it is really bad surely we're not all going to spend all of our time just sitting around our homesteads consuming all our preparations and growing our Victory Gardens. I would imagine that we shall reach some point in time when some form of businesses will start up requiring workers that shall need to be paid. Will they be paid in the currency already available like in the Depression - I don't know.

I would imagine it might be wise to have some of everything, a bit of gold and silver in the way of small coins, some cash in the form of small notes and quarters, and some goods to barter with.

With regards to your bigger issue of getting out of the stock market I can't help you there I am afraid. Maybe someone more knowledgeable shall notice your post and advise accordingly.

Good luck.

-- Carol (usa-uk@email.msn.com), February 08, 1999.

Sorry, guys -- Paper "money" had value in the 1930s depression only because the government was still functioning and in control of the populace.

The situation then was not a 10. I'm not real clear as to what different intermediate points are on the Y2K 1 to 10 scale, but I would say the depression was between 4 and 7. Lot of people hurting, financially, but the infrastructure was intact and the economy and banking system functioning, after a fashion.

Today, we have a significant non-zero probability of the infrastructure going down, and with it effective government control and ability to back the currency by taxation.

More illustrative examples would be the paper money situaion following the American Revolution (period between the revolution and the founding of the republic of which we have remnants of today). Paper money was issued to finance the revolution. Afterwards, the phrase was "not worth a Continental" described the value of that currency.

Then take the Civil War (War between the States) where the traitor Lincoln by force transformed the "united states of America" into the "United States of America" (He established that once a state decided to join the Union, that they were stuck -- never could get back out again, at least without the Federal Government's permission.) Anyway, for the South, I would say the situation was 8 or 9 on our scale. And their money, Confederate notes, was no better than asswipe.

Post 1964 U.S. coins have intrinsic dollar nowhere near their face value, but at least the copper has some value.

But, since it's been so long, 3 generations, since gold and silver have been used as money, I don't think these are going to be too good in the short run. Maybe in a few years. Barter goods.

-- A (A@AisA.com), February 08, 1999.

bold off

-- A (A@AisA.com), February 08, 1999.

Some folks have mentioned how dollars were still usefull during the Depression, and they were because the Depression would be a Y2K 6 or 7. If you want to think about something lose to a 10 and what happens to cash, think of the South following th Civil War.

When I was a child, one of my aunts had two trunkfulls of Confederate currency. Being energetic we kids counted it, a whopping two hundred thousand in Confederate bills. Exchange rate and purchasing power at the time (early 1960's): zero. In fact the exchange rate and purchasing power after Appamatox was the same as it was in the 1960's.

A Y2K at or near a ten would be as devastating as to our govenment which backs the US dollar as losing the Civil War was to the government that backed the Confederate dollar. Without the backing of a central government or a gold standard, printed currency is a novelty item just like Confederate dollars are today.

WW

-- Wildweasel (vtmldm@epix.net), February 08, 1999.

I think Wildweasel is right.

However, I seem to remember reading in a history book about German women using wheelbarrows to carry tens of thousands of marks to the bakery to buy a loaf of bread. This was just before the rise of the Nazi party. So, technically it did have some value, I suppose.

-- Sharon in Texas (sking@drought-ridden.com), February 10, 1999.

I feel very certain about this and it accords with some of the comments. In a 5 to 7, gold and silver are probably a tremendous investment; cash an unknown since we could have inflation/deflation or both for different items. At a 10, which is the premise here, they're all useless for these reasons:

No central government to back up paper money.

We have been off gold standard for so long it is meaningless to most people (ie, they don't recognize its value). Ditto silver.

But this will be the main reason:

People will be starving and dying. bardou right: food (if you can hide it and protect it) will be better than gold. Alcohol will equal gold. Coffee and cigarettes worth slightly less than gold. Also ammunition. Seeds.

During recovery from a 10, which will take five to ten decades, various forms of currency will emerge. Gold or silver might become useful then, who knows? You'll probably be dead so it won't matter. I'm not kidding.

-- BigDog (BigDog@duffer.com), February 10, 1999.