What Will You U$E For Currency When T$HTF?
The more we move toward a cashless society, the more we are at risk should some financial, political, or natural disaster transpire which weakens or destroys societal and governmental dynamics. What people will accept in payment or trade for scarce and critical supplies could threaten your life if you don’t have any, or the cost may be more than you can afford, if you do. Here are some ideas to help you be prepared.
copyright © 2016, all rights reserved. Permission to repost hereby granted provided entire post with all links in tact, including this notice and byline, are included. Please comment any such repost to original posting.
In this post you will learn…
• what makes money valuable is also what can make it worthless;
• plastic and precious metals are useless in the aftermath of crisis;
• why government frowns and suppresses barter, and why to embrace it anyway;
• cash is usually aftermath King… but not always;
• whole new currencies evolve in serious or long term aftermath.
What money is, and why it has value
Money is nothing more than a convenient way to conduct ‘commerce’ (trade goods and services) with a standard and portable stand-in for something else of value. For this to work, all people within the trading area must agree to use it as such, and ‘it’ must have a definable and concretely known value. Any system of money is best handled by the local government, be it a tribal village in ancient times, or a modern industrialized nation. Or, it can be done by a network of banking and financial institutions, or even a combination with government. As we will see, banking options are good for them, bad for everyone else.
The later is what we have, today, and it suffers two problems most of us are aware of, both stemming from the banking side. To fully appreciate that, we should step back in time just a bit. Please take the time to read what you may otherwise presume already to know, because the points made in this section will play to remaining sections in critical ways. This is because only governments used to issue money, and to establish its value, they could not and dare not create money unless they held something of value in reserves somewhere, something of concrete and great value to back it up. Most nations, as did America, used Gold; the ‘Gold Standard.’
Whatever the value standard was, a citizen could go to a bank or government Purser, and demand to trade in the currency for its value in that item (i.e., Gold), or vice versa. This system guaranteed the value of the currency to a known unit of measure, and tended to help establish and maintain a stable economy, and made international trade viable; each currency had a concretely known valuation, and established trust between nations that the standard item, itself, could be obtained, if desired, to settle any balance of trade debt which might exist.
Then came the banks with their own idea, called Central Banks, which enables the printing of Fiat Currency, which is money which has nothing of value backing it. Enter the Federal Reserve Banking System. It has cost you and me a significant sum of our personal lifetime earrings. Some say we have literally been sold into slavery to the banks. Learn more about exactly how much it has cost you personally, here. Many, as do I, call it Treason, including the prophetic warnings of our Founding Fathers:
• “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson in the debate over the Re-charter of the Bank Bill of 1809 (millions of us, including myself, did wake up homeless with the Mortgage Derivative Collapse and associated ‘too big to fail’ bailouts, and we have had nothing but inflation and deflation cycles, not to mention devaluation of the dollar since establishing the Fed)
• “I believe that banking institutions are more dangerous to our liberties than standing armies.” –Thomas Jefferson
• “… The modern theory of the perpetuation of debt has drenched the earth with blood, and crushed its inhabitants under burdens ever accumulating.” -Thomas Jefferson (a reference to the National Debt)
• “History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.” -James Madison
• “If congress has the right under the Constitution to issue paper money, it was given them to use themselves, not to be delegated to individuals or corporations.” -Andrew Jackson (Banks are corporations)
• “The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.” -Abraham Lincoln (the Fed is all about interest paid to the banks for every dollar printed.)
• “Issue of currency should be lodged with the government and be protected from domination by Wall Street. We are opposed to…provisions [which] would place our currency and credit system in private hands.” – Theodore Roosevelt (in the long-running debate about establishing a central bak.)
But the Fed would become reality just in time to pay for WWI with fiat money. But that was not the first time. In the early days of forming new States within the United States, Banks could also print their own money with no attachment to or obligation of government, hopefully backing it up with some kind of standard; a certain degree of trust was involved, and many people found that their banker was a crook. This practice, both legitimate and criminal, was especially common in Gold and Silver mining towns, where shipping precious metals was risky due to bandits. Other negotiable instruments also came to exist, which can similarly be thought of as forms of money. Stocks, Bonds, Notes, Futures, and more. But these featured valuations tied to more complex and less tangible things, and were not simple enough for usage as currency except with brokers and special institutional trading firms.
But several new ways for banks to print their own money also arose which were useful enough by all. One is the ‘Check,’ your checking account. It is merely a highly organized and easily validated (to a point) method of trading in I.O.U.s. Anyone can write an I.O.U. on a any piece of paper, and if the other person accepts it as a debt, and the writer honors it, it has value. And, it can be passed from one person to another until paid, like a Marker used in the underworld.
But people do not trust strangers, and the bank’s checking systems addressed that by using the bank as a kind of validation and tracking of the debt, and the debtor. The underworld uses fear and organized crime to do the same with markers. And, do we not fear the wrath of our banks and the law should we write a bad check? This is called debt bondage, a very real and powerful political and social control system that keeps the locals, that’s you and me, in line for fear of loosing all they own. Unless, of course, you simply choose to opt out, as have I.
As far as checking is concerned, eventually, the check must be traded for real currency, so no new money was actually created, but while in circulation, the total amount of ‘money in use’ is greater than had been printed, a pseudo inflation factor. Today, some 20 billion checks are written each year, with a value of 26 trillion. To put that into perspective, it would pay off the entire National Debt with money to spare. It is also roughly 20 times the value of all U.S. money in circulation. So is the National Debt, and though no causal connection seems to exist, it is an interesting coincidence, is it not?
Banks also ‘print’ money by loaning money that does not exist. They are allowed by law to loan up to 20 times the money they hold in their vaults from depositors. They write a check, and you then use that ‘money’ to write more checks for whatever purpose the loan was intended. They get deposited somewhere, and eventually returned to the issuing bank. You make monthly payments to the bank, money against which more loans can be made. As long as less than 1 in 20 of loaned dollars is converted to cash withdrawal, the bank has gotten away with printing at least 19 defacto dollars; another pseudo inflation factor. A loan is for fictitious money, and how to you repay a fiction? A question well asked, and some have an answer which will astonish you, and though giving you hope, you will fear it, as well.
The worst offender is the Central Banking System, which allows governments to print money with absolutely nothing behind it; no standard. The government itself is printing nothing more than an I.O.U. The Bank, in our case being the Federal Reserve Bank (the Fed), which is NOT a Federal Agency, but a banker-controlled corporation. The Treasury prints money in the form of Federal Reserve Notes backed only by interest bearing Treasury Bonds given to the Federal Reserve (functionally, an I.O.U.), and the Federal Reserve Note is itself therefore also an I.O.U. Some of these are sold to anyone wishing to buy them, quite often hundreds of millions of dollars held by wealthy men of note, but also, ordinary citizens. Those unsold are held by the banking cadre.
This is an automatic inflation driving machine for several reasons, not the least of which is it allows government to fund any massive and costly adventure without worrying about actually paying for it, as long as they are willing to drive up the National Debt, which no one is ever going to pay off. The downside is, of course, that our purchasing power continues to dwindle, and at some point, the dollar will need to be officially devalued, and only YOU and I will loose in that deal. Meanwhile, every increase of the national debt is de facto devaluation; you and I loose purchasing power as if officially devalued. Simultaneously, more and more of tax dollars go to the FED to pay off INTEREST (only) on T Bills, and that money goes directly to the bankers. The debt is NEVER reduced.
If it were, the Fed would actually collapse. Here is an explanation from David Graeber, and English Anthropologist, regarding the first central bank in existence: “In fact this [debt] is precisely the logic on which the Bank of England—the first successful modern central bank—was originally founded. In 1694, a consortium of English bankers made a loan of £1,200,000 to the king. In return they received a royal monopoly on the issuance of banknotes [their ‘Fed’]. What this meant in practice was they had the right to advance IOUs for a portion of the money the king now owed them to any inhabitant of the kingdom willing to borrow from them, or willing to deposit their own money in the bank—in effect, to circulate or “monetize” [create fiat currency] the newly created royal debt. This was a great deal for the bankers: they got to charge the king 8 percent annual interest for the original loan and simultaneously charge interest on the same money to the clients who borrowed it, but it only worked as long as the original loan remained outstanding. To this day, this loan has never been paid back. It cannot be. If it ever were, the entire monetary system of Great Britain would cease to exist.”
There is much more which can be and should be said, but this is not about the evils of the Federal Reserve or financial institutions. The intent was simply to give a glimpse at what money is, and what makes it valuable (or not), in NORMAL circumstances. And, in normal circumstances, the ONLY thing which makes Federal Reserve Notes valuable is a law passed in support of creation of the Fed, which says and which is echoed right on the money, itself, that it is good for all debts, public and private; should you refuse to accept it as such, the debt is forgiven under that law; we are forced to accept it.
But what happens when TSHTF?
In any serious financial, societal, or natural disaster, all bets may be off, and cash may either become a monstrous burden, or have no value at all. To the extent that social systems and governmental control fails, or their function is diluted, the value of money can suddenly become undefined, except by the seller. It is not just a matter of free-market price setting, but weather or not the seller will see value in money, at all, the government no longer being in a position to enforce the law which says it must be accepted.
Some say to hoard precious metals for such crisis, but that is foolishness, because you can’t spend gold. For one thing, it is too valuable, and another, it is too difficult to validate without special chemicals, scales, and knowledge. How does the seller know it is real Gold, or what its actual value currently is? Not only will there be an issue as to weight, which is multiplied by a given value per ounce, but there will be no way to know (where a crises involves loss of communications), what the actual current value per ounce actually is. The wise seller must therefore significantly undervalue any metal offered in payment.
And how do you buy something low in value with something high in value, when there is no way to ‘make change?’ Hoarding Gold is fine for long-term protection of large cash holdings, but it is next to useless and extremely costly to attempt to use it as currency in a crisis.
THEREFORE, if actual money starts to fail in usefulness, whole new currencies will arise.
What will be the new currency in a crisis?
Yes, new currencies, and nothing like money as we know it. But like money, where it is still accepted in a crisis, the value thereof will be determined mostly by the seller, and this will give new meaning to the expression, ‘shop around.’ The most common alternate currencies will become food, water, fuels, and ammunition. Too a lesser degree, anything in high demand and low supply, such as weapons and tools, or anything key to survival. Being aware of that in advance is a great advantage, because there are two things in common with all these items which allows for good preparation.
The first is, that they have a relatively low value now, before there is a crisis. You can afford to stockpile, and would be wise to do so, taking into consideration storage space requirements and shelf life. It would be good to have at least a small hoard of each item in quantities greater than for reserves for personal consumption during the emergency and, where storage space, shelf life, and finances permit, to perhaps have a large hoard of one or more items on the list to become your personally favored currency.
The second is, that anyone can produce them, themselves, to one degree or another, both before and after a crisis. Anyone can sink a well or fetch water from nature, and transport it to where it is less available for ‘profit.’ Anyone can grow and store food if they have the land for it. Anyone can chop wood or make alcohol (fuels) if they but arrange to do so. Anyone can reload spent munitions if they have a loader and can obtain gunpowder, and for the matter, anyone can make gunpowder if they know how to find the raw materials and they are locally available.
Lead for ammunition is another matter, but it is cheap to buy ahead of crisis. So the purchase of a supply of lead and tools to form bullets and reload might be a great idea. Yet most people will not do any of these things, or cannot due to finances or lack of knowledge, and it is exactly that which gives them an excellent future value – extra value, in fact, because in aftermath situations, the normal supply chain of these things has been interrupted or entirely cut off, and access to the knowledge or finances to acquire them with it.
Once TSHTF, you are locked into your current state of affairs; you are either prepared to offer the right currency at an affordable rate, or you are slave and at the mercy to/of those who can. Only one of these two groups has a good chance at survival. That is the worst kind of debt slavery.
Barter, the alternative currency
The government hates barter and suppresses it in a mountain of laws restricting its use. Barter is, in fact, the basis of the new evolving currencies just discussed. But for those in that second, hapless group just mentioned, they may be able to survive for a while by bartering with their earthly possessions, albeit at a costly rate of exchange. A $3,000 professional video camera might be good for a tank of gas, or a few days worth of food; what value is there in a video camera without electricity? But it might be accepted if there is some hope that, eventually, power will be restored, or if the parts might be useful to a tinkerer seeking to build something mechanically useful.
But barter can work well, even before a crisis, despite the laws. The laws are there because the barter concept tends to ‘cheat’ government out of taxes. If you buy something with dollars, you got taxed on the income from whence you got the dollars, and the seller is taxed on the income he earned, and there is likely a sales tax, as well. In barter, as originally conceived and employed before the laws existed, you simply gave labor in exchange for items, or traded items. As long as both parties agreed the exchange was acceptable value given for acceptable value received, it was a done deal. Yes, sometimes one side might feel the value was short, and ask for augmentation with a little cash thrown in. Or not.
Barter best works in a network situation involving more than two parties. You have Oranges and want Apples, I have Grapes and want Oranges, and someone else has Apples and wants Grapes. No problem, a three-way swap. But to do that takes an organized network with the means to track what is needed and match it to what is offered and available elsewhere. Barter associations or organizations are set up, and of course, that takes effort and manpower, and a building that has monthly rent, and other things which take actual money.
The other thing a barter group could do, was to accept goods or labor obligations (I.O.U. for work to be done) as if a deposit in a bank, against which the member offering such could make some combination of present or future withdrawal of other goods or services as they became available and needed. This allows conversion of unwanted or surplus items into future barter trade power, rendering the barter group as a kind of retail store and universal service provider. Again, government does not like anything resembling a bank in procedure, and would normally tax a retailer on inventory.
As all these functions take money to facilitate, barter groups would charge a small fee for a transaction based on the dollar value of the transaction. DOLLARS were still used as the MEDIUM for determining TRADE VALUATIONS. That meant creating a corporate entity to facilitate and organize barter transactions, and typically, charging a membership fee to allow access to the system. That was what led government to take interest in and to legislate against barter; such systems could quickly grow in membership and began processing huge numbers of transactions, some of which were themselves huge in valuation.
I, for example, belonged to such a group, and in a single transaction, moved $35,000 in goods, against which I would acquire needed goods and services which enabled me to live more inexpensively for a full decade — until the government passed laws which forced the barter group out of business, and started taxing everyone involved to the point where the advantage seemed lost. But it need not be that way, especially once TSHTF.
You can join an existing barter program, but if you do, you should also form your own local barter group, because the big programs will not be available in a crisis. Anyone do so without formal corporate existence, and without charging fees, and without a retail or banking format. I highly encourage it, though you should check with a lawyer as laws vary State to State (click the above image for the Oregon situation). Yes, there will be some concern about tax reporting, but that is a minor issue unless you start dealing in large volumes of goods and services. Frankly, most people who barter this way report nothing, because unless it is in volume, it isn’t even worth the trouble to track and report it, not to them, or the government. But the VALUE is in HAVING A NETWORK IN PLACE IN A CRISIS… priceless.
When TSHTF, especially if communications are down, it is both difficult and even potentially dangerous to attempt to form a network. Danger stems from the fact that, unless care is taken to avoid strangers, you may offer to form a network, in which case you state what you have of interest, and if they think they have more guns than you, and want what you have, they know where to get it without cost. Moreover, mutual defense is a thing which can itself become a barter commodity, assuming you have the guns and manpower of good use to others; it is, after all, another kind of service.
So to prepare for a crisis, don’t just hoard key supplies, but establish a barter network, even if you do not choose to use it. Doing so amplifies the value of your preferred currency, because you already have people willing to accept it fairly. Consider these words of wisdom:
• “The propensity to truck, barter and exchange one thing for another is common to all men, and to be found in no other race of animals.” Adam Smith, Scottish Philosopher.
My take is that barter is natural to man, and as such, is an unstated free right to undertake at will – to hell with government, or in reverse, if government has gone to hell, what else do we have to trade with, but barter;
• “Capitalism invariably boils down to barter between two willing parties, neither of whom uses force to work with the other.” Ben Shapiro, Political Commentator.
When TSHTF, force becomes the only commodity the weak minded and hapless will have to trade with. To strengthen your defenses, you need something better, as well as a means of countering force with force of your own. A Barter network gives you both, where mutual defense agreements become a thing which may be bartered: If I have superior weapons and more gun bearers than you, an imbalance exists which might be offset in goods or other services.
• “In primitive society, Man produced directly for the satisfaction of his own wants, but with the development of society came differentiation of functions; exchange and barter arose, various trades sprang up, and with the necessity of commercial intercourse, cam the invention of money.” Charles A. Beard, renowned Historian.
This sums up this entire post in the most direct of statements: barter came first, money after. When money fails to function usefully, we must be ready to barter, either with a new currency of convenience, or outright barter networking. Our very lives could depend upon it.
Not fully convinced? Want more information?
May I humbly suggest some further reading about WHY you should worry about flying excrement from an unexpected fan, and also offer some additional valuable resources? Here is a compendium of useful material on the dangers of crisis and the topic of being prepared, not just in terms of currency, but other considerations which are well beyond the scope of this post. These are Facebook ‘pages,’ so you can FOLLOW them for updates. Please consider to Follow my blog, as well.
• The Fema, Martial Law, Revolution Database. Don’t let the title scare you away; its a compendium of articles and posts about the likelihood and risks of various forms of civil unrest and social, economic, or natural disasters, as well as general advice such as found in the above post. It’s sub-name is When All Hell Breaks Loose.
• The Post Apocalyptic Library. A compendium of resources where you can find critical how-to information needed for survival in a crisis. Everything from how to make a torch to how to make a portable generator from a lawn mower. The idea is to visit those sites and print the instructions, and place them in a safe place and in your ‘go bag’ so that you will have them when needed; they won’t be available once TSHTF.
Posted on August 22, 2016, in Education, Government, History, Political Commentary, Uncategorized and tagged banks, barter, barter systems, checks, civil unrest, commodities, currency, debt, federal reserve, FEMA, financial disaster, ious, Martial law, money, natural disaster. Bookmark the permalink. Leave a comment.