In a Cashless World, You'd Better Pray the Power Never Goes Out (mises.org)

schwit1 quotes the Mises Institue: When Hurricane Maria knocked out power in Puerto Rico, residents there realized they were going to need physical cash — and a lot of it. Bloomberg reported that the Fed was forced to fly a planeload of cash to the Island to help avert disaster. "William Dudley, the New York Fed president, put the word out within minutes, and ultimately a jet loaded with an undisclosed amount of cash landed on the stricken island. [Business executives in Puerto Rico] described corporate clients' urgent requests for hundreds of thousands in cash to meet payrolls, and the challenge of finding enough armored cars to satisfy endless demand at ATMs... As early as the day after the storm, the Fed began working to get money onto the island."

For a time, unless one had a hoard of cash stored up in ones home, it was impossible to get cash at all. 85 percent of Puerto Rico is still without power... Bloomberg continues: "When some generator-powered ATMs finally opened, lines stretched hours long, with people camping out in beach chairs and holding umbrellas against the sun." In an earlier article from September 25, Bloomberg noted how, without cash, necessities were simply unavailable:

"Cash only," said Abraham Lebron, the store manager standing guard at Supermax, a supermarket in San Juan's Plaza de las Armas. He was in a well-policed area, but admitted feeling like a sitting duck with so many bills on hand. "The system is down, so we can't process the cards. It's tough, but one finds a way to make it work."

Comments

Another reason why bitcoin is garbage

[Khyber]

The second you lose power, you're fucked. This is why cash is king, always has been, always will be.

Re: Another reason why bitcoin is garbage

[DontBeAMoran]

Not in Canada, it's not paper anymore.

Re:Another reason why bitcoin is garbage

[ceoyoyo]

I come from a small town with somewhat unreliable power. All the merchants know that if the power goes out, you can take a credit card impression (with some carbon paper and a hard object to rub it, if necessary) and write down the transaction. Some even have cash registers that you can hand crank if necessary. You can also write out a cheque with a pen and any scrap of paper.

I find it hard to believe that in the US, which is thirty years late to the chip and PIN party, you can't use an impression in emergencies.

Re:Another reason why bitcoin is garbage

[jellomizer]

We still have the indents on the credit cards. You could have taken the credit card numbers then punched them in at a later time. There is even an device that take the indents of the card and with carbon paper creates a receipt with the card number on it.

Before the days of credit card, stores kept a Tab on their customers, so they can get goods and services even if they didn't have the cash on hand at the time.

 

Re: Another reason why bitcoin is garbage

[ceoyoyo]

What do you think happened before every corner store had an electronic terminal? Credit cards still existed. You put all your cash, credit slips and cheques in a bag and hotfooted them over to the bank. Someone at the bank looked through them, reconciled the accounts, and gave you a (paper) statement telling you if any of the cheques bounced. If someone blew their limit on their card, that's between them and their CC company.

Yeah, cash is pretty handy when there's no power. It's not the only option.

It's quite funny to see these dire stories about what happens when you lose power. As if credit cards and cheques didn't exist before electronic banking terminals in every store.

Re:Another reason why bitcoin is garbage

[MangoCats]

Yeah, I withdrew about $500 in cash as the storms approached, but more importantly I secured supplies of water, gasoline, and non-perishable food.

Even though we could have driven out the morning after the storm (we were lucky, the 1/2 mile of old trees along our road didn't block us in), we didn't have to. Even though the gas stations were still pumping, we didn't need them. Even though we were able to run the generator to keep the freezer going for a month with the stockpiled gasoline, that wasn't really necessary because of the store of canned and boxed foods. We use propane from big tanks to cook all the time - the only thing that really changed after the storm was the lack of air-conditioning, but the generator was big enough to run a strong floor fan, so that was liveable. And we never lost 4G data, so I did hotspot into work from a laptop once or twice, just because I could.

Point being, if you're self-sufficient for a week or more (and not located on an isolated island, up the self-sufficiency requirement about 10x there...), then you don't really have to worry about cash, check, credit card or bitcoin. Even if you have the money, often times the stores will be stripped of goods, gas stations unable to pump due to lack of electricity, roads impassable or otherwise dangerous, etc.

Money is worth quite a bit less during storm-crisis situations, just have the goods you need on-hand and save the money for when it is back up to normal value. And... don't stockpile stuff that's not readily consumable as part of normal life after storm season passes - that 15 gallons of extra gas in the garage is going in the cars for normal use come November.

The more efficent the more brittle

[DarkOx]

The fact is that the more tightly integrated our society become the more brittle it gets. Specialization is more efficient but it also means "no man is an island."

Skipping intermediary exchange mechanisms like cash and doing direct transfers between accounts is faster but it also means you can't conduct exchanges when the machines that handle the accounting are not available. With cash, and even paper checks, you pay me now and I have some reasonable assurance that the money will be available for my use some time in the future.

Here is the thing though. If we have another 3-7 day blackout like the 2003 one, cash and checks will let everyone muddle thru. Where as all electronic payments being the only means would basically cause the economy to grind to a halt. If the mainland US experienced devastation like Puerto Rico just did and it was national not regional. I don't know super volcano, DPRK EMP delivery, some kind of freak mega storm, than nobody smart is going to be interested in cash!

Face it we would NOT come back from those events as a nation. No matter how big government gets there is no way a coordinated response could be manged on that scale, which means people would have to take matters entirely into their own hands. At that point its barter system at best and that is assuming local leadership/law enforcement can keep some kind of order. I actually think there is a possibility that would occur in a lot places. I suspect most sensible folks would realize that our survival is best served by at least regional cooperation. On the other hand I can see things going pretty mad max too.

Save coins.

[Z00L00K]

Since when you get to a situation where you don't have any choice anymore but cash then coins are the best alternative. It's tough to get change from the shop keepers if the power goes out.

But also realize that shops can't even do anything when the power goes out because everything has barcodes, a carton of milk and a loaf of bread will be impossible to buy.

Re:Save coins.

[Misagon]

Shops will still have price labels, if not on the goods themselves then at least on the shelves.
Electronic shelf labels with LCD's or e-paper run on batteries - not the grid - and battery lifetime is on the scale of five to ten years.

Re:Save coins.

[Kludge]

With cash and coins in circulation, it does not matter whether shopkeepers have coins or not, they can request them from their customers. Last week the guy ahead of me in line tried to pay with a 100 dollar bill, but the store keeper did not have change. I gave the guy 5 $20 bills and took the $100. He paid and left, as did I.

People have been selling milk and bread for thousands of years without barcodes or machines that read them. You just have to know the approximate price of the item, and take the money. It's not rocket science.

Re:Save coins.

[snookiex]

Let's face it, this had to happen eventually: Millennial slashdotters. Wait until they discover that you can listen to music without internet.

Re: Save coins.

[Brockmire]

Unless he's from a Country that has proper anti-counterfeit bills instead of ugly, green paper.

Or fiber lines

[Jarik C-Bol]

Same situation applies to internet connectivity. I live in a smallish (6000) town, and about once a year, some knucklehead will dig without calling and cut the main fiber line, knocking at least half the county offline. At which point, all businesses become cash only, resulting in an embarrassing number of angry people blaming retailers for 'not having a backup' (to a main trunk line?). Hilariously, a few atm's in town won't even work in this situation, because the apparently phone home to confirm transactions. About a business day later, its fixed, but it sure is an uncomfortable reminder how dependent we've become on electronic money.

Another reason why cash is garbage

[DontBeAMoran]

The second you lose power, you're fucked unless you already have cash on hand and until superinflation happens it which case it's only worth something as toilet paper. That's why gold doubloon is king, always has been, always will be.

Re:Another reason why cash is garbage

[Anonymous Coward]

Try buying a loaf of bread with a gold Doubloon. What are you expecting in change, Reales and Maravedis?
There is a reason why Charlemagne took Europe off of the Gold Standard for ~500 years. Gold was, at best, a Currency Of Account and kept in vaults, and utterly impractical for normal trade.

Re:Another reason why cash is garbage

[itsdapead]

That's why gold doubloon is king, always has been, always will be.

Nah. If you're planning for the collapse of civilisation - even temporary - bottled water, canned food, gasoline etc, are king. When the lights go out, gold will suffer just as much from superinflation as anything, but a can of beans will always be worth a day's food.

No point in planning for an apocalypse after which Walmart is still open, but only takes Krugerrand.

Re:Another reason why cash is garbage

[Greyfox]

And a well-preserved shotgun shell will let you defend your cans of beans, assuming you have a shotgun to shoot it out of.

Re:Another reason why cash is garbage

[PopeRatzo]

Nah. If you're planning for the collapse of civilisation - even temporary - bottled water, canned food, gasoline etc, are king.

Here in the US, guns are king. Ammo is king. With 300,000,000 guns in private hands, if the power goes out for any extended period of time, the guy who runs the crematorium will be king.

Re:Another reason why cash is garbage

[Calydor]

"After stealing the world's biggest diamond, you flee into the desert to evade capture. Two days later, parched and about to die of thirst, you come upon a man who offers you a glass of water in exchange for the diamond you stole. What do you say?"

Re:Another reason why cash is garbage

[Anonymous Coward]

Make the trade, drink the water quickly, then attack the guy to get my diamond back.

If he was particularly smart, he would have waited for me to collapse and take the diamond. If he was particularly strong, he'd attack me and take it.

Re: Another reason why cash is garbage

[Anonymous Coward]

That guy is a witness, he must die. I quickly shoot him with my gun, then take any good/water he had on him.

You're not very good at these questions.

Re:Another reason why cash is garbage

[Scarletdown]

That's why gold doubloon is king, always has been, always will be.

Nah. If you're planning for the collapse of civilisation - even temporary - bottled water, canned food, gasoline etc, are king. When the lights go out, gold will suffer just as much from superinflation as anything, but a can of beans will always be worth a day's food.

No point in planning for an apocalypse after which Walmart is still open, but only takes Krugerrand.

In states where it is legal for us to do our own growing; at that point weed will continue to be one of the big local currencies, as will physical labor and other favors (CGA is the order of the day, where C is cash, G is grass, and A is Ass (which can refer to other useful skills in trade in addition to giggity).

Re:Another reason why cash is garbage

[Scarletdown]

And a well-preserved shotgun shell will let you defend your cans of beans, assuming you have a shotgun to shoot it out of.

Oops. No shotgun, but a P8 and a 7mm deer rifle would suffice as well. And on top of that, the rifle would be useful for acquiring fresh meat from the local deer if the situation ever got to the point where backup food sources need to be tapped into in spite of fish and game laws.

Re: Another reason why cash is garbage

[sabri]

I'm going to flip this on its head. A credit card is fully usable without power.

No, I'm going to flip this on its head. In times of despair, the mathematician is king. Why? Because he can manually calculate and verify your beloved BTC transactions.

Re:Another reason why cash is garbage

[TheMeuge]

Always found this to be an illogical and frankly dumb point of view, because somehow you think that in a world where the society has collapsed enough to worry about "someone with more guns and henchmen", you are somehow safer without a weapon. I think history pretty much says you're full of shit. I can't think of any chaotic time or circumstance when someone thought "I wish I were more defenseless."

Re:Another reason why cash is garbage

[nukenerd]

Try buying a loaf of bread with a gold Doubloon.

You can buy one from me, anytime.

Re: Another reason why cash is garbage

[dgatwood]

Not to mention that in the absence of a functioning bullet manufacturing company (or at least a large supply of black powder, primer caps, and material to make new bullets), a gun is a very short-term tool for survival. It's smarter in the long run to buy a crossbow, materials to repair it when it breaks, and lots of reusable arrows. With that combination, you'll still be hunting decades after the guy with the gun ran out of bullets and died of starvation (unless he used the gun to steal your crossbow, of course).

But the better strategy, really, is to have a group of people who trust and help one another. That way, one of you has the gun just in case people with a gun come to try to steal your crossbows, and the rest of you have crossbows and can be out getting food. There's strength in diversity.

Re: Another reason why cash is garbage

[Attila Dimedici]

You are clearly unaware of the fact that gun violence has been on a steady decline in the U.S. while the number of guns in private hands has been on the increase. So your idea that gun ownership has damaged public safety is not supported by the evidence.

Re:Another reason why cash is garbage

[HiThere]

People don't seem to understand "dying of thirst", though I'm not sure two days would be enough unless it was a very hot desert.

When you're dying of thirst you're too weak to stand up, much less assault someone who isn't. And you don't recover immediately after drinking, either.

Re: Another reason why cash is garbage

[Anonymous Coward]

Anything, no legal consequences?

I pimp all three out and get something I actually want.

Re:Another reason why cash is garbage

[The123king]

As a Brit, i'll get to stockpiling rocks.

Generator-powered ATMs?

[DontBeAMoran]

When some generator-powered ATMs finally opened, lines stretched hours long, with people camping out in beach chairs and holding umbrellas against the sun.

So... they were connected to generator-powered networks?

Credit Cards Existed Long Before CC Terminals

[wisnoskij]

Has nobody seen Home Alone 2? Using electricity to process a CC purchase is relatively new. This is a solved problem.
https://www.youtube.com/watch?...
The problem is not with credit cards, but incompetent cashiers and owners who cannot handle changing situations.

Re:Credit Cards Existed Long Before CC Terminals

[Scarletdown]

The problem is not with credit cards, but incompetent cashiers and owners who cannot handle changing situations.

The raised letters on CC's are going away. About half my CC's have eliminated them.

Also, most retailers don't even HAVE those things anymore. Why would they? I've had a retailer use them exactly once in the past 20 years, and that's when the retailers CC processing went out.

And off I go to the Slow Typists' Corner(tm). ;)

Far worse than electricity

[markdavis]

>"In a Cashless World, You'd Better Pray the Power Never Goes Out"

Or malware. Or a network problem. Or ID theft puts a freeze on your accounts. Or someone maliciously attacks your records. Or your device/card/whatever dies for some reason. Or you need to transact with someone who just doesn't have the necessary technology.

In a cashless world, you also give up every last bit of privacy left, because you can neither sell nor buy without the mark of the b..... I mean, without the tools and permission of the government and big business. Everything you buy and sell will be recorded and available for review immediately and any time in the future- revealing not only what you buy, but from whom, when, and where you have been. It also makes it easier for someone to tamper with those records to assist in framing you.

Don't be quick to give allow cash to disappear, you might regret it and there will be no going back.

Re:Far worse than electricity

[Stephen Battleware]

I tend to agree here. There' are several good reason to keep paper notes. And by using them you keep them relevant, so don't be afraid to swing by your favourite ATM and take out a few bill now and then.

Re: Yup, the Digital Panopticon again...

[Stephen Battleware]

One wonders who the real criminals are sometimes, eh? I've read it gets worse, as not only will they steal someone's cash, some of these police organizations will march same to a bank machine and have their victim clean out his/her accounts. So if you ever visit the US, don't take all your bank cards.

Amazon shut-ins

[DogDude]

What about the Amazon shut-ins? I've read plenty of people on this very website, who state that they hate interacting with other people, and they only order from Amazon. What are those malcontents going to do without power? They're certainly not going to a store.

Visa/MC get 2.5% of the economy

[DogDude]

Visa/Mastercard get 2.5% of the ENTIRE ECONOMY in a cashless world. People who don't use cash don't think about this and apparently don't care.

Re:Visa/MC get 2.5% of the economy

[hackertourist]

For debit card transactions in .nl, the banks don't take 2.5%, they take a flat fee per transaction that can be as low as E0.02.

Forget Power...just wait until the computer crash

[sycodon]

Just one day ago my credit union suffered a comm outage of some kind (they are very secretive about it).

As a result, none of their cards would work (Debit or Credit). I had to leave a bunch of groceries at the check out stand and looked like an idiot.

I ended up getting cash from the local branch so I could get groceries.

But, the power was on!

Probably not all that different

[jenningsthecat]

Back before ATM's and the Internet, banks would run out of cash in times of unexpected demand. And in a disaster situation, people sure as hell aren't making bank deposits. The situation would have been a little better back then than it is now with 'electronic money', but probably not a lot. There still would have been a shortage of the means to exchange 'abstractions of value'.

Arguably, we COULD have it better today, with sufficient backup and redundancy - generators and batteries, radio data links, etc. - but haven't invested enough to make it happen. Then again, given a few massive EMP's, all bets are off.

Re: I pray the power never goes out PERIOD

[Miamicanes]

Post-Irma, at least half of the GAS STATIONS in South Florida were closed for at least a few days. Why? No (working) backup power. By law, they're required to have generators, but apparently the state doesn't require them to test, maintain, and certify them as operational. So gas stations grudgingly installed generators after Hurricane Wilma, then didn't do jack shit to maintain them for the next 12 years. Irma came & went, and lots of those generators didn't work.

For Dade & Broward counties, Irma side-swiped us as a weak category 1 hurricane. Our power grid & stores were dysfunctional to some degree for a week. If we'd gotten directly hit by a *major* (cat-3 or above) hurricane, we'd be in AT LEAST as fucked as San Juan is now.

The REAL danger in future storms is going to be people who remember what happened to gas stations after Irma, and to make sure it doesn't happen to them again, go into the next storm with 20 5-gallon cans of gas in their garage. Guaranteed, we'll have at least one news story of a *horrific* fire caused by someone storing EGREGIOUSLY unsafe quantities of gas in an even MORE unsafe location.

As a matter of public safety, local governments need to MAKE SURE that gas will be abundantly and readily available at most 8 hours after the last hurricane-force winds, convince the public that gas WILL be readily available, and actually pull it off. Otherwise, people will do *really* unsafe things because it seems like a lesser evil compared to being unable to buy stuff they need.

Re:So instead of building infrastructure

[DaMattster]

Sending air drops of cash will cause nothing but massive fighting for a worthless resource. The situation in Puerto Rico resembles a post-apocalyptic world. In a post-apocalyptic world cash will have NO value other than being a fuel source for warmth. In a post-apocalyptic world, the ONLY things that will have real value will be the basic necessities: food, fuel, water, and shelter. We might add defensive weapons and ammunition as well because, in the absence of rule of law, the laws of nature prevail: kill or be killed, be a predator or be prey.

Here's a crazy idea

[rsilvergun]

why not stop tying basic survival to whether you've got cash on hand? Why don't we stop fighting among ourselves (while the rich and powerful take 50-60% of everything) and actually help people out when disaster strikes instead of blaming them? I know, I know, the answer is literally in the last sentence I wrote, but a man can dream can't he?