Cash Will Be King When the SHTF (Unless It’s Totally Mad Max)

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by Fabian Ommar

Author of The ULTIMATE Survival Gear Handbook and Street Survivalism: A Practical Training Guide To Life In The City,

Unless some extinction-level event takes the entire planet back into the Stone Age, cold hard cash will still be used.  Cash will be king when the SHTF unless it’s a full-on Mad Max scenario like the one Selco survived.

I get asked frequently about the role of cash during disasters and emergencies. It seems many starting in preparedness think we’ll jump from the pot directly into the fire if the SHTF, with greenbacks becoming a useless relic. 

In reality, SHTF is a slow slide into hell, the proverbial frog in the boiling pot nine out of ten times. It’s exactly what’s happening with COVID-19 and almost everything coming from it

I already wrote about the black market and how it precedes bartering in pretty much any scenario. The same can be applied to money: unless TEOTWAWKI happens, cash will be in use and thus necessary as a prepping item.

Cash is the primary means of payment when things are unstable

When I say cash, I mean paper money (a.k.a. legal tender). There’s currently a battle against cash, and it may become a collector item in the future.  But we haven’t got to that point yet, and objectively, it may still take some time. Also, one thing is what the elites and governments want and push for, and the other is reality. 

In this transitory and volatile moment, going with their narrative and getting rid of paper money “because it’s inevitable” is essentially entrapping and limiting ourselves. It’s the same with most government agendas, by the way – and the opposite of what preppers do.

Trading is a basic human necessity, but paying for it is something else

All the various forms of trading – formal, informal, black market, bartering, etc. – exist simultaneously, all the time, and everywhere. Whatever happens, these exchange systems will be present, and people will trade as they do today, generally speaking.

What varies is the preponderance of one system or the other according to the circumstances. Society will resort more to one or the other in direct proportion to the severity and duration of the crisis: the worse it gets, the more informal the whole economy will be, and vice-versa. 

But what good is plastic or virtual money if the systems used to process those non-physical transactions are out of order for some reason? 

When thinking about SHTF, consider that most people in most places aren’t used to dealing with precious metals and other alternative means of payment for goods and services (much less direct bartering). 

There’s little common reference for that, and it takes some time for society to adjust, even in extreme circumstances. In this article, Selco shared his experience with precious metals when the SHTF.

Cash is freedom and flexibility in any context.

It’s more sensible to prepare for what’s probable rather than for what’s possible

Said differently, it’s essential to prepare for sudden disruptions in the supply chain, especially for those living in disaster-prone or unstable places. But I’d argue it’s equally important to be financially prepared. 

Why? For one, economic crises are quite common and frequent. Between 1970 and 2017, financial meltdowns leading to systemic banking crises have occurred 151 times in 117 countries. Even in developed nations, for instance, twice in U.S. (1988, 2007) and Greece (2008 and 2011).

But here’s what should be more concerning

  • These slumps are getting worse and more contagious every time. 
  • Without the heavy intervention of governments, central banks, or the I.M.F. to bail the system out, things would have been a lot worse in most (if not all) cases.
  • Also, there will be a point when this strategy won’t work or even cause a crash.
  • Finally, these interventions blow the bubble even bigger, so maybe more countries, people, and institutions will be affected next time.

Financial preparedness comes in many different forms.

Bank holidays and account freezings come without warning

Granted, only seven times during that period have governments suspended banking activity. It’s an extreme measure to safeguard the apparatus and forestall even larger meltdowns. 

But when they do, it’s sudden and without warning. Governments, institutions, and the market act like that. Understandably so: warnings would precipitate events and cause everyone and everything to go into a tailspin. 

So, one day we hit the A.T.M., and there’s a huge line. Or, it’s either empty or just dead. Banks are closed, too. Plastic and other payment systems may be out of order or overwhelmed. But the bills will keep coming, and we still have to buy food, fuel, and pay taxes, of course.

When the SHTF, people run to the banks

“No, they run to the stores.” Sure they do – but the hordes still have to pay for toilet paper and food. They don’t do that with bonds or silver coins but with currency. In practice, it’s the equivalent of a bank run.

The modern economic and financial systems are profoundly complex and highly interconnected. Tradings, exchanges, and payments rely on automated algorithm operation: random movements can trigger stampedes with potentially cascading effects. And those are hard to contain. 

When things go bust, people need cash now. It’s that simple.

Compounding threats

I’ve already mentioned the surreal level of indebtedness that’s drowning the world in previous articles to highlight how fragile and unstable things are. Of course, no one in power will admit to that. Much less warn about its dangers and potential consequences.

Add the risks posed by cyberattackspower failures and blackoutslockdownsThe Great Reset, and other very present and real threats. At any point soon, we can have a systemic collapse sparked by a market crash or other Black Swan events as the catalyst.

Look at the places in which these things have happened before. The hard truth is, this whole thing is a castle of cards on top of a ticking time bomb.

How economic collapses unfold

Each country has a different economy and context, so each one gets hit differently. But the script is always the same since even before the Roman empire.

Economies going kaput and currencies failing constantly lead to a painful combination of inflation, deflation, stagflation, and more. Assets can lose value while first necessity items booms. Growth stalls, taxes explode unemployment skyrockets. 

The scope of government responses is equally predictable: a litany of measures that, time and time again, has proven to solve nothing and make things worse. Stupidities like price and wage control, rationing, and others derail production and supply chains, leading to shortages, bank runs, strikes, and other upheavals. 

Then, anything can happen: confiscations, devaluations, super-taxations, and other tricks

In 1990 the newly-elected president declared a week-long bank holiday in Brazil. A few days into it, the government seized 80% of the money from people’s accounts and savings (on average) as an attempt to tame the 84% monthly inflation. 

That confiscation amounts to an estimated US$ 100 billion, or 30% of Brazilian G.D.P. at the time. But hey, it’s not stealing when it’s official

A decade later, Argentina defaulted on its debt and instantly collapsed. People there also thought their savings in USD were safe in the banks. They were painfully wrong:

“On Thursday, Gonzales awoke to find that the government was holding his money hostage. Under extraordinary new banking restrictions, he won’t be allowed to make any withdrawals until June 2003.” [source]

If you know that cash will be king, you are far ahead of those staring at an empty ATM machine or a locked bank.

Similar situations happened in Cyprus, Greece, Venezuela, and others

It sounds like a third-world thing, and indeed the data backs that. Well, for the most part: F.R.D.’s Executive Order 6102 in 1933 was, in practice, a confiscation. One can argue that the current low yields are a “soft” confiscation, especially given rampant inflation. 

But whatever, my point is precisely that: the worldwide economy is looking a lot like a third-world economy (with rare exceptions). Don’t think for a moment governments won’t resort to extreme measures in desperation or that these things won’t affect you because of X or Y. Be prepared.

Below is a list of some recommendations based on real-life crises of the (recent) past. If you want the short version, here it is: Cold hard cash should be just another item in our prepping list, and balanced personal finance is an asset during any crisis. For more detail, follow on:

Cash will be king (stay liquid)

If a financial collapse freezes the system entirely or partially, it’ll probably be for a limited time. How long? Impossible to say. It depends on a lot of things.

If it’s localized (i.e., a few countries or markets), it can be anything from days to a couple of weeks to fix and reboot the system. If it’s something more severe and widespread, it could be longer. Remember, everything is connected.

Either way, it’s unlikely people will turn to gold and silver to pay their bills or buy their food in the short or even midterms. When the market crashes, such as it did early in 2020 due to the pandemic, cash disappears. Everyone has bills to pay and margins to cover, so people dump assets and rush for cash.

Reduce (or eliminate) debts

We’ve changed from a savings-based economy to a debt-based economy during the past half-century. With that, savers have been heavily penalized. Money parked is losing value and fast.

But the fact remains that debt is a drag. Regardless of what happens (Big Reset, a Jubilee, whatever), it’s hard to survive with debt, much less improve our standard of living during a difficult period when we’re overburdened with debt. Paying off debt is extremely important. (Although there are some cases in which you should direct your money elsewhere.)

Plan ahead

Millions in the U.S. (and billions worldwide) rely on their pension funds and social securities for their retirement. These funds are based on the stock and bond markets. 

A collapse in any of those would jeopardize the future of an entire generation. Or at the very least bring a lot of instability and concern to a considerable number of people. 

This is more of an a-side note to the topic but nonetheless important. Get to know how secure is your future. We’ve entered a period of serious generational changes, and this will accelerate.

Keep finances in order

Economic downturns force people to change their standard of living. But it’s much better to make any adjustments before the real storm hits. If nothing serious happens, well, even better.

There’s no telling when or how hard it will hit, but it’s never too soon to start and try to balance things out, if possible, creating a surplus that one may use to increase savings or invest.

I’ve recently moved to a place where rent is 30% cheaper than my previous home. It’s still a safe and decent place, and I can still walk or bike to work and most places like before, so I kept those savings. 

That’s just one of many changes I made in my finance and consumption habits recently. Having lived half of my life with high inflation, economic shocks, and all, I prefer to sacrifice now when it’s not yet too bad (especially when I see dark clouds forming on the horizon). Reducing your fixed expenses can really help.

Keep a cash reserve

This is a straight prepping tip and the main point of this article. Forearmed is forewarned. The purpose of such reserve is particular: to cope with sudden disruptions in currency supply or banking services that can come from market crashes and abrupt monetary policies.

The amount should be related to personal expenses and needs and in proportion to one’s finances. There’s no rule, but in general, I keep enough for three months, at least. Six is better. (Here’s some advice on building an emergency fund.)

Once again, this is not money for wealth preservation or investment but survival. It’s the getaway money. Inflation is running hot everywhere, so it’s a bad strategy to keep a lot under the mattress. Besides, any situation that’s not resolved in 90 or 120 days will require a shift in strategy. 

If possible, have this reserve in your local currency and some in a foreign to diversify. Yes, even if you live in the U.S., which still has the mighty USD, it can be a good idea to have a few Euros, Yens, Swiss Francs, and British Pounds stashed. 

Always OPSEC

Rest assured, people will knock on your door (or crash it) for money long before they come for food or water.

As with other preps and stockpiles, keep your financial plans and strategies to yourself. No telling friends or family, no extravagances or overspending – be smart and play fool about it.

Don’t go into debt to pay for preps

Sometimes, I get asked if I think it’s a good idea to max out the credit card to invest in stockpiles or prepping/survival gear. This is personal but based on what I know and see. My answer is “no.” 

Some might disagree, and it’s okay. But debt is a drag, and it weighs a lot more when things get worse. SHTF doesn’t have a set date, so why rush and risk a personal financial disaster with uncertain results?

Is it essential to have an emergency kit on the ready? Absolutely. I wrote an entire book on this. But the idea is to have something basic as insurance, not drowning in debt to stock up on food, fancy stuff, loads of guns, and ammo. 

It’s much wiser to build your preps and skills slowly, in a planned way

Go for the basics first: if history is any indication, being in good financial health and having some essentials is perhaps more important than having loads of stuff we may or may not use in a potential SHTF.

The pandemic also offered a good lesson that everyone should heed: cash, toilet paper, medicines, food, and other everyday items proved more useful than fancy B.O.B.s or guns in the types of situation most of us found ourselves in the past couple of years.

What about precious metals and cryptos?

Precious metals have been used throughout history as insurance to preserve wealth and survive during difficult times.

P.M.s have a high-value-density-per-size, so from a prepper’s perspective, I’d say it’s a sensible strategy to some silver or gold (or both) stashed around.  

It can be anything from official mint and suppliers’ certified bars and coins, all the way to jewelry and silverware. Depending on the situation, even precious metal scrap will do. Gold or silver-plated “semi-precious” jewelry can be useful in some emergencies if you know what you’re doing.

When it comes to cryptos, these too have some advantages, and the biggest, in my opinion, is portability. I personally don’t see any downside to having an emergency sum allocated in a crypto coin of preference, always in a personal wallet, of course. 

Cash will be king when the SHTF in almost every scenario.

Unless we are dealing with a Mad Max scenario or an extinction-level event, cash will be king. It remains utterly important to cover for necessities. Likewise, mid-term preparations should be in place if the situation prolongs or deteriorates, so we can adapt and move on with life. 

The Organic Prepper has a wealth of information and knowledge on how to cover both, with books (and new book bundles), boot camps, and articles aplenty, on all prepping topics imaginable.

I intend to keep insisting on (and preparing for) the gradual, slow-burning SHTF, with the economy at the epicenter (or the leading cause) of most forthcoming events. It’s already happening. In practice, this means being ready for disruptions, shortages, protests, decadence, stagflation, totalitarianism – and lots of social unrest. 

Whatever the scenario, I believe cash will remain important, and having some always in reserve and ready for emergencies should be every prepper’s priority.

Do you keep cash on hand for emergencies? Do you have any tips for those who want to build a cash emergency fund? Keeping OPSEC in mind, share your thoughts and suggestions in the comments

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About Fabian

Fabian Ommar is a 50-year-old middle-class worker living in São Paulo, Brazil. Far from being the super-tactical or highly trained military survivor type, he is the average joe who since his youth has been involved with self-reliance and outdoor activities and the practical side of balancing life between a big city and rural/wilderness settings. Since the 2008 world economic crisis, he has been training and helping others in his area to become better prepared for the “constant, slow-burning SHTF” of living in a 3rd world country.

Fabian’s ebook, Street Survivalism: A Practical Training Guide To Life In The City, is a practical training method for common city dwellers based on the lifestyle of the homeless (real-life survivors) to be more psychologically, mentally, and physically prepared to deal with the harsh reality of the streets during normal or difficult times. 

You can follow Fabian on Instagram @stoicsurvivor

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