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The "Death of Money" will not happen---just the death of credit.

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posted on May, 17 2012 @ 09:32 AM
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A lot of doomsayers make a key assumption about the collapse of civilization that is more of a daydream on their part than any kind of conclusion based on historical precedent.

Survivalists Wish that money will be useless in a collapse.

Credit will evaporate. Credit is based on the creditor's beliefs about the future, including the debtor's ability and willingness to pay. Credit is extinguished when there is an out-and-out collapse of the economy.

But, until some government starts printing money, cash is ALWAYS the fallback position. It was in the US Great Depression, It was during the 2003 invasion of Iraq. Cash becomes a premium, not because people have faith in it, but because it is habit, and the vender in every flea market has to take something for his goods. He may refuse cash for big ticket items like generators or cases of liquor; but when it comes to selling a dozen eggs or an ounce of coffee grounds, or an individual cigarette or 22 round, sellers will begin taking coins after only the briefest of hesitations.

It is in the interest of both buyer and seller to "trust in currency" to a small degree, in order to facilitate the transaction. Suppose you come to the flea market with a thousand rounds of ammo. After you have taken all the village's eggs in payment, after you have taken all the spare cans of cream-style corn in barter, what else is there? You're going to take cash, especially because you can buy liquor and porn with the coins, instead of trading off your hard-bought food supplies. So it will be in your OWN interest to act as if you "believe" in the full faith and credit of the government.

And cash will be in SHORT SUPPLY--the first requirement for it to have value. Most looters will be taking goods, not cash registers when they smash up a shop. And with no banks working, with no ATMs functioning, most people will only have a bit in their pockets, or a small stash of coins in a jar on the nightstand at home.

But the people running what is left of stores will be taking cash (because they have to, to liquidate their inventory to a customer-base lacking real trade goods). And since you can buy stuff with it, you will be doing so.

So don't believe it when you read a "money will be worthless" assumption in some apocalyptic's daydream of TSHTF.

Hang on to your pennies.




posted on May, 17 2012 @ 09:57 AM
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I think you make some great points and I find myself in agreement with you. People will lose their homes, cars. etc to the banks because the banks will call in their loans while simultaneously no longer extending credit (to the 99%)
Cash is a habit and will remain as the secondary system of barter if not the first.
Wise words few may wish to hear.



posted on May, 17 2012 @ 09:59 AM
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i don't know about your theory.
unless your coins have silver,copper,or even gold in them, i believe the 'fake' money will be worthless.
if there are no banks to recognize the value of the 'fake' money,its not worth anything.
barter will rule! always has,always will. (i barter a lot!)
look what happened in france around 100 years ago. they changed the currency and the old money was worthless!
the govt. payed the people pennies on the old money for people to trade in for a limited time.after that the old money was worthless!
so,precious metals and trade will rule the day if the financial system collapses.
on a side note,there was a really cool video posted on ATS on how you can extract the silver from old coins using
materials the public can access. sorry don't have a link,but it is definitely worth checking out.
feel free to reply!



posted on May, 17 2012 @ 10:40 AM
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reply to post by tovenar
 


Cash flow ends for everyone because people stop getting paid.

If you are worried about the future and what you may do to prepare your friends, family, and country for what may lie ahead, I suggest you pick up a copy of "Reinventing Collapse", and learn from Orlov's experience. He gives us a clear vision of what to expect, including which strategies worked best for individuals, and what items proved most valuable to stock up for barter use when cash has no value because the economy crashed. What you learn from the past can help you to navigate a course through the future. I can recommend the book wholeheartedly, even as I respectfully disagree with some of his conclusions.

Dmitry Orlov calls the Five Stages of Collapse.

Stage 1: Financial Collapse

Stage 2: Commercial Collapse

Stage 3: Political Collapse

Stage 4: Social Collapse

Stage 5: Cultural Collapse

When the Soviet Union collapsed, many of its state run systems continued to function. For example, most Soviets lived in public housing, fueled by public utilities, and they got around using public transportation. When their economic system went down, even though few people had much or any usable cash, their homes were still heated and not boarded up, the lights stayed on, and they could still get around using buses and trains. Here in America, the free market and privatization makes ours a very different story. When we stop paying our bills, the lights go out and the banks take our homes. If you don't have money for gas, or happen to live where trains and buses don't go where you need to go, your only recourse is to walk or hitch hike. When cash stops flowing, paychecks halt immediately and services screech to a halt.

The public has no clue just how weak and vulnerable the U.S. banking system has become. At one time, the United States had a fractional reserve banking system backed by physical gold money. Today, its financial system is entirely based on a fiat monetary regime with practically no fractional reserve ratio whatsoever. I remember watching Peter Schiff on CNBC and Fox Business between the years of 2005-2007 debating about the upcoming collapse of the mortgage and housing markets. On several occasions, Schiff was the laughing stock on the set as anchors and other guests thought he was simply crazy in his forecasts. By 2008, the laughs had stopped while the country watched as the U.S. housing values began their rapid decline that would eventually surpass the disastrous records set during the 1930’s Great Depression.

When will the manipulation end? I my view it will end when the U.S. enters into STAGE 2 or the Commercial Collapse which Dmitry Orlov talks about. At that point all faith that “the market shall provide” is lost. Money is devalued and/or becomes scarce, commodities are hoarded, import and retail chains break down, and widespread shortages of survival necessities become the norm. According to Orlov, a country does not have to systematically go through all five stages of collapse. But when the financial collapse occurs, the commercial collapse is sure to follow. With all things considered, Orlov believes the overall conditions are far worse in the United States today than they were for the U.S.S.R in 1989.

While, the U.S. Govt. and Wall Street may be able to postpone the inevitable for a while longer by printing more dollar digits, issuing more paper treasuries and manufacturing more derivatives, these are temporary solutions. When SHTF I can't predict which will play out in various circumstances, but we should be aware that the U.S. has millions of military veterans and millions of weapons. The USSR had the vets but not the weapons in private hands. People will eventually choose to support an alternative to criminal/mob rule, unless the criminal gang is the only alternative to something worse. As the most heavily armed society in the developed world, the U.S. can easily go the way of well-armed criminal gangs controlling urban zones or well-armed militia sprouting up to take out the criminals. There is historical precedents for either scenario. My point is simply that a heavily armed culture with tens of millions of firearm-trained vets is not going to follow the route of the former USSR and any case wandering around as a homeless migrant is not a good survival strategy.



posted on May, 17 2012 @ 01:26 PM
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Originally posted by reficul
i don't know about your theory.


Theory is too strong a term. All I'm saying is, "when you react to news of collapse, consider the possibility that cash may not automatically, immediately, become worthless. I'm not saying trade your supplies for money, or stockpile money.

I guess I'm saying, if someone knocks over an armored truck in the middle of the meltdown, stuff your pockets with bills. You'll need the toilet paper in any case. On the other hand, if someone offers you "take" all your "worthless American money" for a can of beans, consider the possibility that you are being had. Not much stronger than that.




unless your coins have silver,copper,or even gold in them, i believe the 'fake' money will be worthless.


And I'm saying that sweeping generalizations can cost you.

Money, all money, is a store of value. It is only "worth" what someone will give you for it, precious metal content notwithstanding. In an orderly society, the pubic assumes that value is stable and even "inherent." If society becomes unstable, all bets are off.




if there are no banks to recognize the value of the 'fake' money,its not worth anything.


It is not banks that ascribe value; it is buyers and sellers in the market place. Banks don't ascribe value to recreational drugs; yet I'm sure that the black market will continue to prosper.




look what happened in france around 100 years ago. they changed the currency and the old money was worthless!
the govt. payed the people pennies on the old money for people to trade in for a limited time.after that the old money was worthless!


I am familiar with the Bank panic of 1907, and the Panic of 1919. I thought that 1912 was a pretty prosperous year, globally. I'll have to read up on that.



so,precious metals and trade will rule the day if the financial system collapses.


If the financial system collapses, then the political system will have collapsed as well. When (not if) someone tries to assert him/her self as the successor government, the fastest way is to....honor the previous regime's currency.

That happened in Iraq in the wake of the US-led 2003 invasion. The Dinar fell to nearly 3000 to the dollar (and many US soldiers bought them as souvenirs). Then the US interim government said they would exchange the old Dinar for IQD at about 1800 to the dollar. Today its trading at better than 1170 to the dollar.

People who threw out their old money, and assumed it was worthless because their government had collapsed, gave away a lot of value.

Something to think about.



posted on May, 17 2012 @ 01:35 PM
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Originally posted by wasaka
Cash flow ends for everyone because people stop getting paid.


Cash flow occurs from people buying and selling. They may not be selling their labor to an employer ("getting paid" as you put it), But as long as people move currency, there is "flow."



If you are worried about the future and what you may do to prepare your friends, family, and country for what may lie ahead, I suggest you pick up a copy of "Reinventing Collapse", and learn from Orlov's experience. He gives us a clear vision of what to expect, including which strategies worked best for individuals, and what items proved most valuable to stock up for barter use when cash has no value because the economy crashed. What you learn from the past can help you to navigate a course through the future. I can recommend the book wholeheartedly, even as I respectfully disagree with some of his conclusions.


I have a couple of books to recommend as well:

Extraordinary Popular Delusions and the Madness of Crowds -Charles Mackay

The Great Wave: Price Revolutions and the Rhythm of History -David Hackett FIsher



posted on May, 17 2012 @ 02:25 PM
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Cash will only work as long as there is a reasonable assumption that things will be back to normal some time soon. In a SHTF scenario, cash may work the first week or two, but after that...forget it.

Barter will be the only way to go. Why would I part with any needed supply for cash, without any guarantee the next guy will take it?

Money works based on faith in the issuing institution. If that institution collapses, it's worth only the paper it's printed on.

Mark my words, the best cash will be cigarettes. Small, easy to divide, and best of all, I don't need 'em, so I'm perfectly willing to part with them to addicts for something more important.



posted on May, 17 2012 @ 02:49 PM
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reply to post by tovenar
 


Words of wisdom my friend, i'm glad someone is looking at the history books for their examples instead of hollywood portrayals of shtf. We could all take a lesson from studying places like Iraq, Afghanistan, Etc.

From my studies of SHTF i couldn't find a single one where money was absolutely worth nothing. No matter how bad its gotten, people still trade in currency.

Not saying its impossible for money to absolutely collapse, its just not likely.



posted on May, 17 2012 @ 05:27 PM
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reply to post by wasaka
 

A bit blinkered, some good points.
However, the USSR had a MASSIVE reservist pool of ex-soviet forces guys.
These reservists all keep an assault rifle at home with ammo, so I don't see the assumption that the US will go worse than the USSR's fallout was.
Hopefully also the US won't see the rise of the oligarch's either


I do agree that a private-based economy for the utility's sector is more vulnerable than a nationalised one though.



posted on May, 17 2012 @ 05:32 PM
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Originally posted by Nephlim

From my studies of SHTF i couldn't find a single one where money was absolutely worth nothing. No matter how bad its gotten, people still trade in currency.



The same is true of gold. There's a "BUY GOLD!" commercial where the announcer says that, "traded for over 5,000 years, it's value has never been zero!"

The same is true of wheat, actually, and wheat goes back 2000 years further, in the fertile crescent.

I am not saying the Federal US government's currency will always be treated at face value; just pointing out that it won't go to zero until "something better" and more reliable is on the scene to replace it. And yes, the crowd may agree that cigarettes are a more reliable store of value that printed lies. But on the way there, someone will have to out-and-out refuse money first, and that will be a bit of a psychological hurdle.



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