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I keep mine in the freezer...gives a whole new meaning to "cold hard cash"
People tend to hide money in very typical spots, the freezer being one of them. Someone I know was robbed recently, and the robbers seemed to be looking for money (it was an older lady). They looked in all the typical hiding spots. In this case, she did not stash any money in her home.
Anyhow, I think people robbing homes are keen on where people usually hide money. Nobody would find my grandmas spot, it was specially built just to hide money. I wish she never told me about it though, because if she loses some money she may blame me!
In the house where I grew up, we had a relatively odd guy who lived next door. And when my brother and I were outside shooting hoops in our driveway, we noticed that he was literally burying cash in his backyard.
Looking back on it, I can understand why it's good to have some emergency cash available at home...but buried doesn't seem like the smartest choice. If, say, a natural disaster or some other emergency came along, there is a good chance that you'd have to grab a few things and get out of the house ASAP...probably not the time to be digging around in the yard.
Originally Posted by user_id People tend to hide money in very typical spots, the freezer being one of them. Someone I know was robbed recently, and the robbers seemed to be looking for money (it was an older lady). They looked in all the typical hiding spots. In this case, she did not stash any money in her home.
Anyhow, I think people robbing homes are keen on where people usually hide money. Nobody would find my grandmas spot, it was specially built just to hide money. I wish she never told me about it though, because if she loses some money she may blame me!
Hmmm, this guy should have talked with your grandma before he hid his cash..
I think this one part of a more comprehensive solution.
I recommend keeping a cash reserve (in several different currencies) in a local bank safety deposit box. It's an elegant solution, because the bank does not get to use that money for profit while paying you nothing, and you don't have to worry about burglars, fire, etc.
I think it's also important to have $1K or so in cash stashed where it can be immediately accessed, but reasonably secure from the usual risks (fire, burglary, etc).
For those that think there's no foreseeable circumstance where having $5K in cash would be needed, I recommend you carefully read some of the accounts of how close we were to shuttering the banks on Sept 18th, 2008. Consider also Chris Martenson's reasoned suggestion that, given an insolvent FDIC, they could drag out payouts on accounts at closed banks, so if your money is in a failed bank, the FDIC could conceivably have you waiting for months or years for recoupment.
After reading 2 pages of messages, I'm *still* wondering why acegolfer's wife thinks that huge amount of cash will make her safe in an emergency.
Stores of food and water and emergency *equipment* is something every household should have. Think earthquake kit. Or hurricane kit. Or snow kit. Whatever you want to call it.
For those that think there's no foreseeable circumstance where having $5K in cash would be needed, I recommend you carefully read some of the accounts of how close we were to shuttering the banks on Sept 18th, 2008.
This is hyperbole, the majority of banks are perfectly solvent. The primary problem in the summer of 2008 was with broker dealers (e.g., Lehman Brothers) not banks.
If the financial system collapsed your $5k is likely to be worth about the same as monopoly money. The USD is the US financial system, you can't have a collapse in one without a collapse in the other. Having a good supply of water, food, etc is going to be much more useful than the paper money of a collapsed financial system!
Also, the FDIC is not going to drag out anything. The treasury will pump the FDIC full of money before it would risk problems with public sentiment with the banking system.
This is hyperbole, the majority of banks are perfectly solvent. The primary problem in the summer of 2008 was with broker dealers (e.g., Lehman Brothers) not banks.
If the financial system collapsed your $5k is likely to be worth about the same as monopoly money. The USD is the US financial system, you can't have a collapse in one without a collapse in the other. Having a good supply of water, food, etc is going to be much more useful than the paper money of a collapsed financial system!
Well put, this is most true. I did, however, pull out of the market on Sept 19. I now have everything in cash and don't know what to do with it. I moved it into CDs but they are only guaranteed through the end of the year and looks like Fidelity will not go under, so I am just sitting on cash.
At one point I did start to stock up on food and the like. I still don't think it's a bad idea, but not as urgent now as it was last year. I'll wait to see how things move forward through the rest of this year before I decide what to do.
One thing I will say is that it's time for all to just batton down the hatches and ride this thing out. I am watching how I spend money and plan to not spend anymore going forward than I absolutely have to.
This is hyperbole, the majority of banks are perfectly solvent. The primary problem in the summer of 2008 was with broker dealers (e.g., Lehman Brothers) not banks.
The major problem started with a half-trillion dollar electronic run on the money markets that occurred in less than two hours midday on Sept 18th. Are you suggesting that such a move, left to run to its logical conclusion, would not have pancaked the banking system right along with it?
And the sound bite that the "majority of banks are perfectly solvent" is true but misleading. The vast majority of assets are under the control of a small minority of large superbanks, and the vast majority of those large institutions that have over 90% of the banking system's assets are NOT perfectly solvent.
Quote:
Originally Posted by user_id
If the financial system collapsed your $5k is likely to be worth about the same as monopoly money. The USD is the US financial system, you can't have a collapse in one without a collapse in the other. Having a good supply of water, food, etc is going to be much more useful than the paper money of a collapsed financial system!
Also, the FDIC is not going to drag out anything. The treasury will pump the FDIC full of money before it would risk problems with public sentiment with the banking system.
In a complete collapse, perhaps. But if your money is trapped in one sector or one institution that suffers a disorderly failure, cash is more likely to be king. One example is a successful hacker's attack on interbank communications.
The FDIC, as Martenson points out, is already dragging its feet. PCA stands for "Prompt Corrective Action," not "Ponder Corrective Action." The FDIC has lost us $billions already by allowing insolvent institutions to keep digging a hole months and months after they should have triggered a regulatory response.
I agree that treasury would be inclined to pump the FDIC full of freshly printed monopoly money, but if you combine scenarios with a Chinese or coordinated global sell-off of treasury debt, or with a public revolt over fed+treasury printing triggered by a significant inflationary bout, I don't know that the FDIC is backstopped nearly as well as most seem to think.
One thing, though, is the idea of having your hands on the things needed to make it through the shock of a systemic collapse isn't the worst idea I've ever heard.
Are you suggesting that such a move, left to run to its logical conclusion, would not have pancaked the banking system right along with it?
I'm suggesting these issues were primarily related to the broker dealers and not the banks. Of course, problems with the broker dealers would effect the banks but suggesting that the banking system would collapse is not accurate.
Quote:
Originally Posted by Bob from down south
The vast majority of assets are under the control of a small minority of large superbanks, and the vast majority of those large institutions that have over 90% of the banking system's assets are NOT perfectly solvent.
This is hyperbole again. The "superlarge" banks do control a big chunk, but its not the "vast majority". The large to medium sized banks are a mixed bag in terms of solvency. Now most of the bank failures are small to medium sized banks that dealt with commercial real estate.
Quote:
Originally Posted by Bob from down south
But if your money is trapped in one sector or one institution that suffers a disorderly failure, cash is more likely to be king.
The FDIC has proven that it can successfully manage bank failures without holding up people's (insured) deposits. I see no reason to be paranoid about their ability to continue to do so, things were much worse last summer.
Regardless, I would not recommend that someone put all their money in one institution.
Quote:
Originally Posted by Bob from down south
but if you combine scenarios with a Chinese or coordinated global sell-off of treasury debt, or with a public revolt over fed+treasury printing triggered by a significant inflationary bout, I don't know that the FDIC is backstopped nearly as well as most seem to think.
Or space aliens stealing everyone's deposits. The events you mention are about as likely as the space aliens. The Chinese can't sell off it's treasuries without blowing itself up, they can't stop purchasing treasuries right now without blowing themselves up, the public is too busy watching TV, and there is almost nothing occurring that would produce significant inflation.
We can list all types of doomsday situations, but in either case having a bunch of paper money of a collapsed system is going to do you little good. All the situations that would make the $5k useful, would make it also useless. I think the idea of saving cash for these events is just old school thinking rooted in a different sort of financial system. You are giving more reality to the paper money than what is there, without the current financial system it is nothing. In contrast a commodity-based money is based on the culture and is unlikely to change rapidly. With a fiat system, its pretty pointless. You're better off with water, food, and other essentials.
Its possible that people have gotten so use to fiat paper money, that they believe it has some sort of value in itself. But I doubt it. This sort of thing is more conjecture about human psychology than economics though, money regardless of its nature only has value so long as everyone agrees that it has value. Does it make sense to put some silver and gold under your mattress? Depends if people would consider it money if the financial system collapsed, in itself its going to do you little good. I don't think they would, the current system is too far removed from metal-based money. But who knows, I don't know the answers to these questions so the best thing I can do is just make sure I have essentials on hand.
Last edited by user_id; 08-19-2009 at 12:20 AM..
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