Those of us with our rarified…interest…probably encounter more rumors than in any other ‘hobby’. Just to run down the incomplete list – black helicopters, FEMA camps, UN armored vehicles, coded highway signs, numbers stations, Illuminati, the Vatican, suitcase nukes, Skull & Bones, etc, etc, etc. Indeed, a tinfoil haberdashery would make a fine bit of coin from our demographic.
Latest rumor(s)? Bank runs, banking holidays, currency revaluation and everyones favorite – Weimaresque hyperinflation.
What is a banking holiday? Well, if you think “Christmas, Labor day and Thanksgiving” you’d be correct…those are holidays that the banks are usually closed on. However, when our fine friends at .gov decide to close all the banks (for whatever reason) this is called (though not by them) a banking holiday. The most well known banking holiday episode was by FDR back in the 1930’s. Don’t think that didn’t make an impression with a lot of folks. Theres plenty of old folks walking around today who still don’t ‘trust’ banks after that episode. The old joke about stuffing money into your mattress? That’s where that came from.
Whats a banking holiday mean to you? It means that unless you have cash you’re not going to be buying much. Your debit cards and checks probably wont work since who knows if the bank they’re drawn on is still in business? Credit cards might work but who knows if the electroninc point-of-sale readers (“credit card machines”) will be able to communicate with the issuing financial institutions. Run to the ATM and get cash? You and five thousand other people. Assuming the ATM isn’t stripped bare of cash, I can’t imagine the results will be good. After all, a banking holiday is to prevent a run on the bank which means not letting people get their cash…so the ATM may not be your salvation. Safety deposit box at the bank? Sketchy. I would think no bank would be opening its doors to the public under those circumstances. That wad of $50 bills in your box may as well be on the moon.
Imagine the following:
Its Friday and you’re driving home. You’re planning on picking up some groceries, maybe get a movie. You spent most of your cash filling up the car that morning and you’ve got about $8 in your pocket. Your bank is on the way to your home so you figure you’ll hit the ATM. You get to the bank and theres a line of cars stretching out the parking lot from the ATM. You wonder what that’s all about but aren’t too concerned… You’ll just hit the drive through…which is curiously empty. You drive up to the window and you see the lights are off in the bank and theres no one behind the glass. You cruise through the parking lot and see people walk up to the bank, pull at the door, and then peer through the glass as they wonder why they cant get in. A note in the window says that the bank is closed for business under orders of the .gov and ‘we apologize for the inconvenience’. You quickly head over to the supermarket and see that their ATM is flashing ‘OUT OF SERVICE’. Your attention is drawn to the commotion of a customer arguing that his bank card/debit card/credit card is perfectly good and that the store’s machine must be reading it wrong…the machine keeps beeping and giving an error code that means ‘unable to verify’. No cash? No sale. $8 to last you until Monday…assuming the bank opens on Monday.
That scenario isn’t far fetched because it has happened before. The cause of the problem was a failed communications satellite that made POS transactions at things like gas pumps and ATMs impossible. With banks closed for the weekend and many vendors unable to accept plastic, there was a bit of commotion. But it only affected a very small group of customers and banks. However, the implication is telling … that very small, localized failure caused some big headaches. Imagine it on a nationwide scale as a result of a declared ‘bank holiday’.
The obvious solution is the simplest – keep an amount of cash on hand. How much? However much you think you would need to continue living as you do for as long as you think you’ll be cut off from your banked funds. At least a week, and a month would probably be about right. How much money should that be? Depends on your lifestyle. If you’re like me and have stored gas, stored food, stored ammo, and stored fuel you probably aren’t going to need as much to cover your monthly expenses as someone who has nothing in their cabinets and closets.
Whatever you decide to keep on hand, keep it in a mix of bills. A stack of hundreds isn’t going to cut it when no one is going to have change. If you try to buy a half gallon of milk at the Stop-n-Rob with a $100 bill the clerk is probably going to refuse to sell to you rather than lose all his small bills, which would preclude him from being able to make other sales. A mix of $20,$10,$5 and $1 bills would probably be best. Maybe a roll of quarters or two as well. Worried that you’ll be sacrificing something by taking money out of the bank? Inflation is at around 4% officially and if you factor in fuel and food, its at least twice that. On a great day you’re getting 2-3% at the bank. Leaving the money in the bank isn’t doing a thing for you.
Safety? You think its not safe keeping that kind of money around the house? First of all, unless you told the neighbors, you’re going to be the only one who knows you have it. Secondly, stick it in the bottom of your gun safe or hide it in your basement. Yes, theft is going to be a huge risk…but not from some thug out on the street. The biggest threat will be from you. You’ll wind up using that cash for something because its just laying there looking at you and you have an urge to go out for dinner, pick up a movie, or buy a new toy. Out of sight, out of mind.
Even if you discount bank runs and bank holidays entirely, which is understandable since they’ve been so rare in the past, its still a good idea to have a lump of cash at the ready for emergencies. During a disaster when you need to buy something cash will be accepted at a lot more places that American Express. Especially if the power is out. Have cash.
If you’re the hopelessly lazy, like myself, I’ll spell it out for you so you can do this as quickly and painlessly as possible and be done with it:
1) Go to your bank, withdraw several hundred bucks.
2) Tell the chick behind the counter you want twenties, tens, fives and ones.
3) Go home. Break the money down into bundles of $100, with each bundle having a mix of bills. Secure each bundle of $100 with a rubber band or paper clip.
4) Stick all the bundles in an envelope, box or pickle jar.
5) Stuff it in your safe or shove it in a corner of your closet under the old boots.
6) Forget about it. Its not there. It doesn’t exist. Go about your business. Nothing to see here, folks.
There. You’re done.