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What is Money When the System Collapses?
29 June 2013, 15:59,
#1
Exclamation  What is Money When the System Collapses?
Another good article from James Rawles' Survival Blog. Mac Slavo gives us some tips on what and how we can prepare for life after an economic collapse. While this is somewhat geared for US readers (guns and ammo), the basics apply to everyone... JP

http://www.survivalblog.com/2013/06/what...slavo.html

What is Money When the System Collapses?

by Mac Slavo

What is money?


Economist Mike Shedlock defines money through the eyes of Austrian economist Murray N. Rothbard as “a commodity used as a medium of exchange.”
Quote: “Like all commodities, it has an existing stock, it faces demands by people to buy and hold it. Like all commodities, its price in terms of other goods is determined by the interaction of its total supply, or stock, and the total demand by people to buy and hold it. People buy money by selling their goods and services for it, just as they sell money when they buy goods and services.”
What is money when the system collapses and the SHTF?

In disaster situations, the value of money as we know it now changes, especially if we are dealing with a hyperinflationary collapse of the system’s core currency. This article discusses money as a commodity in an event where the traditional currency (US Dollar) is no longer valuable.

In a collapse of the system, there will be multiple phases, with the first phase being the “crunch”, as discussed in James Rawles' novel Patriots. The crunch is the period of time directly preceding a collapse and the collapse itself.

Traditional Currency

Initially, the traditional currency system will maintain some value, though it may be rapidly depreciating in buying power. For those with physical, non-precious metal denominated currency on hand (paper dollars, non-silver coins), spending it as rapidly as possible is the best approach.

It is during the crunch that ATM machines around the country will run out of currency as people aware of the rapidly devaluing dollar will be attempting to withdraw as much money as possible. This immediate increase in money supply, coupled with the population’s general knowledge of the currency depreciation in progress, will lead to instant price increases for goods, especially essential goods.

If your physical cash has not been converted into tangible assets, this would be the time to do so. Acquiring as much food, fuel, clothing and toiletry items as possible would be the ideal way to spend remaining cash before it completely collapses to zero, as it did in the Weimar inflation in 1930s Germany, or Zimbabwe’s hyperinflation in recent years.

Precious Metals


During the initial phase of the ‘crunch’ precious metals will be a primary bartering tool, but this may not last long. The old survivalist adage “you can’t eat your gold” will become apparent very quickly. In a total breakdown of the system, food, water and fuel will be the most important tangible goods to acquire.

Consider someone who has a two week or one month supply of food on hand. Do you believe they would be willing to part with that food for some precious metals? The likely answer is no. There will be almost no bartering item that one would be willing to trade their food for once it is realized that food supply lines have been cut.

That being said, since most will not barter their food, not even for fuel, the next recognized medium of exchange by merchants, especially those selling fuel, will be precious metals. For the initial crunch, silver coins, especially recognizable coins like 90% silver quarters, dimes and half dollars, along with one (1) ounce government mint issued silver coins like US Silver Eagles, will be accepted by some, probably most, merchants. For those trying to flee cities to bug-out locations, silver coins of the aforementioned denominations may be a life saver, as they can be used to acquire fuel. While we recommend having gold, as well, the issue with gold is that its value is so much higher than that of silver, that breaking a one ounce gold coin into 10 pieces just to buy a tank of gas will not be practical. It is for this reason that having silver on hand is highly recommended. Packing at least $25 – $50 of silver coins in each bug-out bag would be a prudent prepping idea.

In a total SHTF scenario, silver and gold may eventually break down as a bartering unit, as contact with the “outside” world breaks down. One reason for this, is that the fair value price of precious metals will be hard to determine, as it will be difficult to locate buyers for this commodity.

This, however, does not mean that you should spend all of your precious metals right at the onset of a collapse. Precious metals will have value after bartering and trade is reestablished once the system begins to stabilize. Once stabilization begins, the likely scenario is that precious metals will be one of the most valuable monetary units available, so having plenty may be quite a benefit. At this point, they could be used to purchase property, livestock, services and labor.

Water

Water is often overlooked as a medium of exchange, though it is one of the most essential commodities for survival on the planet. Had individuals in New Orleans stockpiled some water supplies during Hurricane Katrina, much of the loss of life there could have been avoided.

For those bugging out of cities, it will be impractical to carry with them more than 5 – 10 gallons of water because of space limitations in their vehicles. Thus, having a method to procure water may not only save your life, but also provide you with additional goods for which you can barter.

An easy solution for providing yourself and others with clean water is to acquire a portable water filtration unit for your bug-out bag(s). While they are a bit costly, with a good unit such as the Katadyn Combi water filter running around $150, the water produced will be worth its weight in gold, almost literally. This particular filter produces 13,000 gallons of clean water! A must have for any survival kit.

Because we like reserves for our reserves, we’d also recommend acquiring water treatment tablets like the EPA approved Katadyn Micropur tabs. If your filter is lost or breaks for whatever reason, each tablet can purify 1 liter of water. In our opinion, the best chemical water treatment available.

Clean water is money. In a bartering environment, especially before individuals have had time to establish water sources, this will be an extremely valuable medium of exchange and will have more buying power than even silver or gold on the individual bartering level.

Food

In a system collapse, food will be another of the core essential items that individuals will want to acquire. Survival Blog founder James Rawles suggests storing food for 1) personal use 2) charity 3) bartering.

Dry goods, canned goods, freeze dried foods can be used for bartering, but only if you have enough to feed yourself, family and friends. They should be bartered by expiration date, with those foods with the expiration dates farthest out being the last to be traded. You don’t know how long the crunch and recovery periods will last, so hold the foods with the longest expiration dates in your possession if you get to a point where you must trade.

Baby formula will also be a highly valued item in a SHTF scenario, so whether you have young children or not, it may not be a bad idea to stockpile a one or two week supply. (For parents of young children, this should be the absolute first thing you should be stockpiling!). In addition to water, baby formula may be one of the most precious of all monetary commodities.

Another tradable food good would be seeds, but the need for these may not be apparent to most at the initial onset of a collapse, though having extra seeds in your bug-out location may come in handy later.

Fuel

Fuel, including gas, diesel, propane and kerosene will all become barterable goods in a collapse, with gas being the primary of these energy monetary units during the crunch as individuals flee cities. For most, stockpiling large quantities will be impractical, so for those individuals who prepared, they may only have 20 – 50 gallons in their possession as they are leaving their homes. If you are near your final bug-out destination, and you must acquire food, water or firearms, fuel may be a good medium of exchange, especially for those that have extra food stuffs they are willing to trade.

Though we do not recommend expending your fuel, if you are left with no choice, then food, water and clothing may take precedence.

For those with the ability to do so, store fuel in underground tanks on your property for later use and trading.

Firearms and Ammunition

Though firearms and ammunition may not be something you want to give up, those without them will be willing to trade some of their food, precious metals, fuel and water for personal security. If the system collapses, there will likely be pandemonium, and those without a way to protect themselves will be sitting ducks to thieves, predators and gangs.

Even in if you choose not to trade your firearms and ammo during the onset of a collapse, these items will be valuable later. As food supplies diminish, those without firearms will want to acquire them so they can hunt for food. Those with firearms may very well be running low on ammunition and will be willing to trade for any of the aforementioned items.

In both James Rawles’ novel Patriots and William Forstchen’s One Second After ammunition was the primary trading good during the recovery and stabilization periods, where it was traded for food, clothing, shoes, livestock, precious metals and fuel.

Clothing and Footwear


We may take it for granted now because of the seemingly endless supply, but clothing and footwear items will be critical in both, the crunch and the phases after it. Having an extra pair of boots, a jacket, socks, underwear and sweaters can be an excellent way to acquire other essential items in a trade.

As children grow out of their clothes, rather than throwing them away, they will become barterable goods.

It is recommended that those with children stock up on essential clothing items like socks, underwear and winter-wear that is sized a year or two ahead of your child’s age.

Additional Monetary Commodities


The above monetary units are essential goods that will be helpful for bartering in the initial phases of a collapse in the system. As the crunch wanes and recovery and stabilization begin to take over, other commodities will become tradable goods.

In A Free Falling Economy Makes Bartering Go Boom, Tess Pennington provides some other examples of items that will be bartering goods during and after a crunch including, vitamins, tools, livestock, fishing supplies, coffee and medical supplies.

Another important monetary commodity after the crunch will be trade skills. If you know how to fish, machine tools, hunt, sew, fix and operate radios, fix cars, manufacture shoes, or grow food, you’ll have some very important skills during the recovery period.
If at first you don't secede, try, try again!
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29 June 2013, 16:46,
#2
RE: What is Money When the System Collapses?
I thought everyone was going to throw everything they needed in a big black plastic bag and head for the nearest hedgerow?

This past week has been illuminating with gold falling by 20% on top of it's already steady decline. Some analysts are predicting gold will be below $1000 by year end.

As the economy improves, and it is improving very slowly and in a different way than we wished, silver will decline further. Much of the silver supply is recycled during other manufacturing processes. As manufacturing increases silver supply increases and price declines.

Amazing that the world markets went into a steady and purposeful plunge two weeks after the Bilderburg meeting!

For the average prepper cash is still king. While we envision a barter society after SHTF the rest of the society will not realize their economy is not going to recover until well into the event. Your money is going to be in demand for several weeks or months after SHTF, or at least until everyone realizes the shops are not going to open again and they are going to have to go to the source for commodities.

This also asks the question, do you have a safe in your house and money in it? (rhetorical question, do not post your financial details)

I am not talking about a cash box with a little key and twenty dollars, euros or pounds inside. I am talking about a secure safe bolted to wall or floor with enough money inside to pay your way for a month or two, or at least get you out of town!

SHTF, banks are going to be closed, ATM devices shut down for lack of power or smashed in the first wave of looting. What you have on hand is going to be all there is.

Your carefully developed "skills" are not going to kick in as needed commodities for a year. Everyone around you will have to decide that things are not going back to normal before you become a valued contributor because you can juggle, make faces or sing and dance.

Even farming and gardening skills may not be of recognized value for up to 1 1/2 years after SHTF, especially if the event happens at the end of the growing season and you have to endure a winter, then find seed to plant, tend the fields all summer then harvest.

Perhaps what we should really be prepping for is the slow decline into the permanent poverty of 3rd world status as TPTB take from the "haves" and give to the "have nots" until everyone is equally poor and starving. We may look back and find that what we endured was not a "crash" but a carefully controlled lowering of life expectations.
__________
Every person should view freedom of speech as an essential right.
Without it you can not tell who the idiots are.
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30 June 2013, 16:58,
#3
RE: What is Money When the System Collapses?
Im my opinion, and from info Ive received from very very good sources, the economy is not recovering at all, in fact for the fed res to consider "quantitative easing" as a measure of trying to maintain the dollars power, is basically like giving an alcoholic another beer !this action speaks for itself, its a dire measure. What I am told and from research Ive done very thoroughly I might add, mathematically the u.s.dollar cannot recover. I was told just last week by a professor of economics that he predicts that the dollar will have crashed before Christmas !! Now then due to the fact that nearly every other country in the world keeps its reserves in dollars, and the world trades in dollars, when this happens the world will go into a crisis never seen before by mankind. It will affect everyone.
A good source of info right now is bloomberg tv, I don't have a tv but stream this, and on there most days there are trend analysts, ceo's of central banks etc etc well worth keeping an eye on. Having said that of course there is still a certain amount of spin goes on, yet many many of these analysts predict dire consequences, and thats mainstream. The world banks are all frantically propping up the dollar right now,as well as the aforementioned quantitative easing from the fed.res itself. So when we're told "the economy is doing better that we thought" or similar statements, it is nothing more than giving false hope and warranting governmental extreme measures they are taking on their own people. Heres a quote to think about....
"Through out history, no nation has ever abandoned a sound monetary system. However no nation has ever taken on the F I A T banking system until now, without having its economy completely destroyed. There are no exceptions. The United States will not be exempt from this law of history"
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30 June 2013, 20:23,
#4
RE: What is Money When the System Collapses?
SC check out MAX KEISER REPORT ......if you have ,t already on YT or RT
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30 June 2013, 22:26,
#5
RE: What is Money When the System Collapses?
(29 June 2013, 16:46)Mortblanc Wrote: Perhaps what we should really be prepping for is the slow decline into the permanent poverty of 3rd world status as TPTB take from the "haves" and give to the "have nots" until everyone is equally poor and starving. We may look back and find that what we endured was not a "crash" but a carefully controlled lowering of life expectations.

Nail on the head ! Sad
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30 June 2013, 22:46,
#6
RE: What is Money When the System Collapses?
(30 June 2013, 20:23)Straight Shooter Wrote: SC check out MAX KEISER REPORT ......if you have ,t already on YT or RT
Yes I have seen it. He's as mad as a ships cat !! however he does have a certain mad style in his presentation, yet always hits the spot when it comes to the truth about whats happening. He also says what just about 99% of analysts Ive seen are saying. The most important part in this interview, I feel is the huge, well beyond huge U.S. debt. Now to me this really is the joker in the pack. Analysts of all kinds are saying the dollar could crash within the next 4 - 6 months, and thats a lot of them all agreeing on this time scale, however were the United States debts to be "CALLED IN " well the balloon goes up right there and then.
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1 July 2013, 03:13,
#7
RE: What is Money When the System Collapses?
They do call economics "the dismal science" for a reason.

The end scenario of any academic economic system analysis and extrapolation is inevitable collapse as the cycles of correction grow more intense as the system becomes larger.

Every model ends in failure.

My Economics professors back in the late 1960s were completely baffled that the system had not collapsed by then.
__________
Every person should view freedom of speech as an essential right.
Without it you can not tell who the idiots are.
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1 July 2013, 10:06,
#8
RE: What is Money When the System Collapses?
(1 July 2013, 03:13)Mortblanc Wrote: They do call economics "the dismal science" for a reason.

The end scenario of any academic economic system analysis and extrapolation is inevitable collapse as the cycles of correction grow more intense as the system becomes larger.

Every model ends in failure.

My Economics professors back in the late 1960s were completely baffled that the system had not collapsed by then.

That is probably caused by the fact that the politicians change to rules. The models kept some variables within reasonable bounds. I bet they never envisaged how much this lot would borrow to keep the ship afloat back in the 60s. Even in the 80s we were amazed at how much it was then. Compared to now it was chicken feed.
Skean Dhude
-------------------------------
It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change. - Charles Darwin
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3 July 2013, 00:47,
#9
RE: What is Money When the System Collapses?
Couldn't agree more with you on this one SD. I think most people can see very clearly that this situation is very much out of hand, and is inevitable. Consequences dire. There is a real further concern though. We all know the real reason the Iraq war was waged, Saddam stopped trading oil in $. We see politicians now laughing about "smoking gun" scenarios at after dinner speeches,yet tens of thousands died in that conflict.
Recently both Russia and China have stopped trading oil in dollars!Now Im not trying to assume the U.S will invade these countries, however the massive pressure it will put on them financially will only lead to worsen this dire situation they are in. It makes me wonder(especially if you look closely at recent U.S armed forces deployments, not only men, but their navy, and newly armed missile systems in Eastern Europe) if due to the dollar being the real power of the U.S.,subsequently crashes, what options are then left open to them, which keep them as a major player on the world stage. Personally I feel that just as in the Iraqi conflict some smoking gun scenario will be sold to the general populace, and away they go. Problem is China and Russia in the last three weeks have both warned the US of "dire consequences" if they interfere with either Syria or Iran in any way. Warnings such as this, do worry me, as American governments are not known for "not interfering" in fact quite the opposite is true. This time however I feel the U.S will see themselves as having no choice, due to this massive fear of losing the world control they have enjoyed for so many years,therefore ignoring any consequences and taking us all into the abyss of war.
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3 July 2013, 09:09,
#10
RE: What is Money When the System Collapses?
Agree with most of your comments SC except for the 'smoking gun' scenario sold to the general populace - everyone I know thought it was bunkum from the offset.
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