#42: Currency and trade in a regional or global disaster

Even in a disaster, currency very rarely falls to absolute zero; and even then, it's only temporary.

Most survivalists imagine (hope for) a scenario where money will be useless and society will hit the reboot button. This doesn't happen---it won't happen, and it hasn't happened in 5000 of currency's existence. The reason is simple: nature abhors a vacuum. When people need to trade, they will use any commodity as a medium of exchange. That's all that money is, a commodity used as a store of value and a medium of exchange.

Even when a regime has totally ceased to exist (such as after being invaded), the fiat currency still circulates until it isreplaced by the conqueror.

Two examples of this are the Dixie Greenback and the Nazi Reichsmark. In both cases, the government was deposed and jailed by victorious invaders. But within days of occupying the capitol, the conqueror realized that minting a brand new specie would be a tremendous expense, while actively encouraging crime and fraud. Even worse, the occupied peoples might refuse to trade the new currency, thus making the occupiers look impotent. In almost all cases, the victor says that "in the interests of a smooth transition" the old money will be phased out, and for a time can be turned in for the new money.

Greenbacks continued to circulate for almost a year after Jefferson's surrender. Likewise, Vichy (Nazi puppet-state) currency continued to be used in daily transactions in France until late in 1946.

The reason for this is simple. Some people will only have the old money with which to buy food. Outlawing the old currency means the populace must either starve, or receive welfare assistance from the victors. And the local grocer doesn't want to quit taking old money, because they have a stash of old money they got stuck with when the old regime collapsed. If they refuse to take the worthless paper, then no one will take THEIR worthless paper, either. And customers who cannot buy food have been known to riot....

Just like Iraq, where the Old Dinar sank to a low of 2200 to the US dollar. (I have friends in the 3rd inf who bought dinari at 1780 to the dollar...). The Americans had no interest in halting trade and fomenting even more discontent. And the local shopkeepers were happy to slowly unload their own supply of dinars. And leaving the people with no currency at all would have simply fed the insurgents.

The idea that people would magically "give up" using money is like the idea that they would magically "give up" using medicine, once they already know what it is. If they cannot get any from an outside supplier, they will simply invent their own.

Nice, though, in a bad enough situation people would probably use a barter system in addition to cash. This would likely take the form of useful stuff (such as ammo, metal, name wat u will) being traded for other useful stuff. For example, I'll give you some seeds to plant and grow food, if you will give me some nails so that I can make repairs, or if you work for me for a X period of time, I'll give you food, water, and a shirt/socks/pants/whatever. Though those would both be extreme, in a less extreme situation, I'll work for you for an hour helping you clean up debris if you'll let me take a shower, because my well isn't working and you have hot running water. (I personally didn't do that but do know people who did during the aftermath of Irene)

reply to post by JDBlack


I think you're right. Any small thing that is mass produced, and has a small unitary value can be used as a stand-in currency. In Post-war Europe, american candy bars and cigarettes were both used for currency, as were nylons to a lesser extent.

Pills would work. Gasoline might as well. or condoms.

Supposedly, the US dollar was originally called a "buck" because it was work one deer's hide.

Eventually, though, some local authority would start circulating its own currency. Then the next thing you know, there'd be property taxes and a draft and meaningless elections.....