It's a Lovely Spring Morning...

[Jonas]

It's a Lovely Spring Morning...

It’s a lovely spring morning. You climb into the car, crank the ignition, flip on the radio, and head for work. But the usual music isn’t on the radio. Instead you hear the newscasters announcing that due to “deteriorating economic conditions in Europe”, the government has declared a “bank holiday” and "Great Leader" will speak to the nation later today.

You quickly take a rough inventory of your situation. You have £7.00 in bills in your wallet, 34p in change in your pocket, and ¼ tank of gas in the car. You pull into the next gas station and are met by a hand-lettered sign on the pump which reads “CASH ONLY!!! NO CHECKS OR CREDIT CARDS!!!" You swing by the bank to see it closed with a policeman standing at the front door, his patrol car parked to block the driveway. You drive down the road to the local convenience store to find a crude “OUT OF ORDER” sign on the ATM machine, and the same “CASH ONLY” signs on their gas pumps. You dial your workplace on your cell phone to find out what’s going on and get a recorded message saying that “cell phone service has been temporarily suspended – please try later”. You head back home and try on your land-line to reach your workplace. The call rings through on the fourth time you try, but there is no answer. You figure that there probably won’t ever be an answer again. Now what?

You realize that you and your family now have to survive on whatever you have on hand at this moment for an indeterminate time period. Your bank account is inaccessible, and will remain so for some time. Your savings account is unreachable as well. Ditto for the three gold and seven silver coins in your safe-deposit box. Your credit cards are useless. Your job may never return and your steady pay check every two weeks may be a thing of the past. When (or if) you’re ever able to pull your money out of the bank, there may be a limit as to how much you are able to withdraw over a given time period, and the purchasing power of each pound will probably be considerably less than it is today.

This isn’t an improbable scenario. In the US in 1933, the President, Franklin D. Roosevelt, declared a week-long “bank holiday”, raided safe-deposit boxes for gold coins, and devalued the dollar. We see the ECB floating the same bright idea in Cyprus today. Take credit cards, an ATM, and a cell phone out of the above scenario and you’re back in time where the “impossible” actually happened in the USA and now could happen anywhere, anytime. I believe it will happen again, based on the world’s current economic situation, and the fact that the world’s currencies are all merely paper without backing of any kind.

My suggestion for this Spring: sit down with your spouse and children and paper and pencil and take a hard look at where you and your family would be in the above scenario. Then take what actions you can to improve your financial readiness. No, it’s not possible for everyone to have twenty gold eagles and £10,000 in cash tucked under the mattress. It is possible to go over your expenses, cut back where possible, sell excess “stuff” to raise cash, get cash out of your checking and savings accounts, empty and close your “safe-deposit” box, keep your car's gas tank at least half full at all times, and clip coupons and buy on sales to cut your food bill and still include an extra can or two for the emergency pantry. In other words, pray for the best, prepare for the worst, and start Spring off right.