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WHAT IS MONEY WHEN THE SYSTEM COLLAPSES?

Arizona1950 2012/11/27 02:43:53
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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.”

“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‘ book 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 1930′s 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 enought 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 posession 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 tradeable 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 James Rawles’ 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 tradeable 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 radioes, fix cars, manufacture shoes, or grow food, you’ll have some very important skills during the recovery period.

Copyright Information: Copyright SHTF plan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats.

http://www.shtfplan.com/emergency-preparedness/what-is-money-when-the-system-collapses_12292009

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Top Opinion

  • peggy 2012/11/27 04:36:37
    My thoughts ...
    peggy
    +9
    We have been prepping for several years. One thing I can tell you expiration dates wont mean nothing to hungry people. In fact this date business is fairly new. Use basil leaf to protect anything with starch in it from bugs. Just because it has bugs dont throw it away. Set in hot water the larvae and shells float your wheat and meals can steal be used. It also makes great rabbit and quail bait. Okay tjats enough for now. KEEP PREPPING ....TIMES TICKING AWAY

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Opinions

  • Dodgerfan 2012/12/03 07:56:09
    My thoughts ...
    Dodgerfan
    +1
    No paper currency has ever survived in the form of money. But gold and sliver are still used today just as they were thousands of years ago due to durability and ease of transfer.
  • Arizona... Dodgerfan 2012/12/03 13:04:07
    Arizona1950
    true ... but the majority of people will barter for their next meal unlike the Fed Reserve that likes to print funny money ... soon your gold and silver will run out.
  • Bonita Colley 2012/11/30 21:52:39
    Better keep preparing ... better to be safe than sorry.
    Bonita Colley
    +1
    Of course Gold and Silver for those who have it. Most people haven't been able to buy either so the next best thing and which will be the most used is the bartering system, for goods and services. Ammo will be more precious than gold afraid to say!
  • Arizona... Bonita ... 2012/12/01 06:07:49
    Arizona1950
    I believe Water will become your gold ... and food your silver.
  • Cat 2012/11/29 07:12:13
    My thoughts ...
    Cat
    +1
    "WHAT IS MONEY WHEN THE SYSTEM COLLAPSES?"
    ANSWER: Kindling for my campfire.
  • Arizona... Cat 2012/11/29 12:45:04
    Arizona1950
    +1
    Yep ... and those in cold areas can use for stuffing their clothes to keep warm.
  • hapman 2012/11/28 10:09:35 (edited)
  • Arizona... hapman 2012/11/29 05:38:03
    Arizona1950
    You do know that global warming is a natural cycle right ... ? That Al Gore is just fear-mongering for profit ...

    Everything else you said I agree with about 90% of it.

    Learn a little or learn a lot ... your decision.

    http://endoftheamericandream....
  • hapman Arizona... 2012/11/30 12:57:05 (edited)
  • Arizona... hapman 2012/11/30 15:31:35 (edited)
    Arizona1950
    We are not messing it up to any degree that is having any world-wide affect ... that's the point. There is a massive volcano under the North pole ... I would say if the polar caps are melting at an alarming rate ... that volcano is going to blow and there isn't a damn thing you can do about it.

    Solar burst do affect our weather when they are strong enough ... and there is not a damn thing you can do about it.

    When it comes to government making a profit ... they will lie. As more info came out about the harzards of cigarettes huge tobacco companies lobbied to get some sort of satisfaction as they probably invested millions upon millions to keep those who would support their industry in office. So what does the US Government do now to support their rich constituents ... the sell overseas to poor countries and mess up their health so we need global medical care.
  • hapman Arizona... 2012/11/30 21:29:34
    hapman
    whatever. 95% plus of all the climate scientists say we are causing global warming. so where is your information coming from? it's not coming from climate scientists. how reliable is it? anyway, for all but 2% of the people in a scientific discipline to be in agreement is pretty unusual. for that to happen it's got to be conclusive. only a tiny minority dissent. the case is so good it's united everybody else in the field. the experts say it's us. the people who know more about this stuff than anybody else say it's us. so who say's they're wrong and why? you haven't given me anything convincing. all the science is on my side. which brings me to the point I made about only being able to find opinions from economists and oil people on your side. you didn't even mention it. or the one about the source of you information.
    or the one about massively increased co2 levels because of increased emissions but this somehow isn't increasing the greenhouse effect. or the one about how al gore profits from this alleged scam. or the one about what is causing global warming if artificially elevated co2 levels aren't. this is how christians debate. it is characteristic of not having a case. if you do have a case, you haven't showed it to me yet. what I really don't understand is, you're going up...
    whatever. 95% plus of all the climate scientists say we are causing global warming. so where is your information coming from? it's not coming from climate scientists. how reliable is it? anyway, for all but 2% of the people in a scientific discipline to be in agreement is pretty unusual. for that to happen it's got to be conclusive. only a tiny minority dissent. the case is so good it's united everybody else in the field. the experts say it's us. the people who know more about this stuff than anybody else say it's us. so who say's they're wrong and why? you haven't given me anything convincing. all the science is on my side. which brings me to the point I made about only being able to find opinions from economists and oil people on your side. you didn't even mention it. or the one about the source of you information.
    or the one about massively increased co2 levels because of increased emissions but this somehow isn't increasing the greenhouse effect. or the one about how al gore profits from this alleged scam. or the one about what is causing global warming if artificially elevated co2 levels aren't. this is how christians debate. it is characteristic of not having a case. if you do have a case, you haven't showed it to me yet. what I really don't understand is, you're going up against a united front of scientific heavyweights. why? why do you think they're wrong? you are aware of science's spectacular record? it gets it right. if it doesn't get it right, it goes and finds out what went wrong, and gets it right. is what you've got good enough to go up against what science has got?
    (more)
  • Arizona... hapman 2012/12/01 06:08:40
    Arizona1950
    LOL ... when you start with "whatever" ... I know there is no intelligent conversation here ... just blind following.

    Have a nice day.
  • Striker 2012/11/28 02:56:23
    Better keep preparing ... better to be safe than sorry.
    Striker
    +2
    We've forgotten something here thus far. When collapse hits, governments and their fiat money will disappear, along with TheFed. Then free markets will very quickly come up with probably many varieties of SECURED currency. That will be the natural cure to a major part of the money problem.
  • Arizona... Striker 2012/11/28 03:38:47
    Arizona1950
    +1
    I just don't know Striker ... I wish I still had my mom ... she was an incredible person in times of crises and being born in 1920 ... she saw and learned a lot.
  • Striker Arizona... 2012/11/28 03:52:49
    Striker
    +1
    Well, all our folks are gone now, we're on our own. Best to ally up, but we must be real sure of who and what those allies be.
  • Arizona... Striker 2012/11/29 05:38:46
    Arizona1950
    +1
    I know ... and agree.
  • FeedFwd... Striker 2013/01/31 14:08:06
    FeedFwd ~POTL
    +2
    I think it kind of depends on how much overall disruption and lawlessness arises. We could eliminate the effects of the FED if we could start making all our exchanges in terms of ounces of gold (or silver) instead of dollars. But that means businesses and employers need to start charging in ounces of gold for their goods and services and paying their suppliers and employees in ounces of gold. If the government won't mint money fully backed by gold or something with intrinsic value (the full faith and credit of the government has virtually no intrinsic value and what it has would be gone in a collapse), then others will. You won't be able to rely on the government and "insurance" like FDIC to protect your money, so banks will return to getting business based on their reputation and you will have to pay banks for the services they provide since will no longer be able to skim profits from fractional banking and other dodgy means.
  • texasred 2012/11/28 01:37:25
    Better keep preparing ... better to be safe than sorry.
    texasred
    +2
    The barter system will be back and the only thing that will keep people going.
  • Arizona... texasred 2012/11/28 02:02:01
    Arizona1950
    +2
    Yes ... but are you prepared to see the death of those who refuse to prepare ... ? I know I'm not.
  • texasred Arizona... 2012/11/28 18:47:42
    texasred
    +1
    I'll do what I can to help, but we have to be realistic.... there's only so much we can do.
  • Arizona... texasred 2012/11/29 05:40:18
    Arizona1950
    +1
    I know ... getting involved with your neighbors would be a much better idea for protection of home and property with each looking out for eath other, than trying to barricade yourself indoors.
  • texasred Arizona... 2012/11/29 16:09:14
    texasred
    +1
    I'm fortunate that most of the people in our area are Conservatives, very responsible and pretty well-prepared. We do have some friends that just don't have it together. Oblivious to everything going on around them. My 83 yr. old Mother is better prepared than they are. So we'll be helping them.
  • Arizona... texasred 2012/11/30 00:39:12
    Arizona1950
    +1
    A co-worker told me today ... that should I feel a need for help, I am on his list as friend. To be truthful, I hope I won't need it ... it all depends on the timing of when things go boom.
  • texasred Arizona... 2012/11/30 01:45:33
    texasred
    +1
    You must feel good about that, though!
  • Arizona... texasred 2012/11/30 01:57:53
    Arizona1950
    +1
    Of course ... he will supply me with weapons as well when and if they become necessary ... as he said, don't bother buying one there will be plenty to go around ...
  • texasred Arizona... 2012/11/30 02:17:20
    texasred
    +1
    And I'm sure we're going to need them.
  • Arizona... texasred 2012/11/30 02:20:59 (edited)
    Arizona1950
    +1
    All depends on how close you are to a large city. My fear is they brought public transportation into my area ... which brings the bad elements in ... then they hop back on the bus and away they go.
  • texasred Arizona... 2012/11/30 03:15:30
    texasred
    That's why I like living in Kingman. About 30k people, but spread out over several hundred miles.
  • HatinOnHaters ;~} 2012/11/28 01:29:46
    We are so done ...
    HatinOnHaters ;~}
    +2
    we are so done steak cooking
  • Arizona... HatinOn... 2012/11/28 02:02:29
    Arizona1950
    +2
    Hope for the best and prepare for the worst.
  • OPen Minded 2012/11/28 01:22:53
    Better keep preparing ... better to be safe than sorry.
    OPen Minded
    +2
    Keep yer powder dry!
  • Arizona... OPen Mi... 2012/11/28 02:02:55
    Arizona1950
    +1
    and don't carry a leaky bucket.
  • OPen Mi... Arizona... 2012/11/28 02:15:42
    OPen Minded
    +2
    I hate a leaky bucket...
  • Arizona... OPen Mi... 2012/11/28 02:27:52
    Arizona1950
    +1
    yep ... lol
  • Ron in Oregon 2012/11/27 20:47:56
    My thoughts ...
    Ron in Oregon
    +1
    Better to be quiet than to advertise that you are prepared.
  • Arizona... Ron in ... 2012/11/28 01:09:48
    Arizona1950
    +2
    To warn others so that they prepare ... I believe is my responsibility as a human being. If one chooses not to heed the warning ... not my concern.
  • TombstoneJim 2012/11/27 20:19:02
    Better keep preparing ... better to be safe than sorry.
    TombstoneJim
    +4
    you cannot eat money
  • Arizona... Tombsto... 2012/11/28 01:52:08
    Arizona1950
    True ... but try telling that to a 2-yr old. Sorry ... I jest.

    Sadly those who will hold onto it thinking that is all the preparation they will need may be doing just that ... and burn the rest for warmth.
  • JJ 2012/11/27 17:32:11
    We are so done ...
    JJ
    +2
    Then I guess we'll really have to depend on God...right?
  • Arizona... JJ 2012/11/28 01:10:50
    Arizona1950
    +1
    Only in keeping hope and faith alive ... all else is your responsibility at this time I would say.

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