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The precautionary savings of physical cash may even be on the rise as people realize how easily their economic lives could be switched off in an instant in the

The precautionary savings of physical cash may even be on the rise as people realize how easily their economic lives could be switched off in an instant in the increasingly digital world, whether by being intentionally targeted or accidentally disabled with a lot of bureaucracy slowing down the correction. Having enough cash under your mattress that authority figures can't easily take from you is a psychological comfort.

mbg721 5y ago
Physical cash that buys less and less with each passing day is not as useful, though.
- lazide 5y ago
  If you don’t get paid interest at a bank, and no brokerage is going to take you on (or you don’t trust them), then what else are your options?
  - posnet 5y ago
    I mean isn't that the reason preppers love gold/silver bullion?
    - lazide 5y ago
      Yup, though the minimum ‘buy in’ per unit without getting raked over the coals with high spread products is too high for many people. If you’re trying to set aside $20/wk, silver is terrible and good luck with Gold.
    - dylan604 5y ago
      i've never understood how this would work in these doomsday scenarios. are people going to walk around with scales to weigh the gold for every transaction as well as test the purity of the gold? are they going to mint their own coins? I just don't see how it's supposed to work
      - deleted 5y ago
        [deleted]
      - XorNot 5y ago
        Modern banking was also basically invented because of this very problem - gold was inconvenient so you had gold coins with insigna's which promised a standard weight of gold and could be reasonably trusted due to being hard to forge. Which gave way to IOUs from gold smiths, since carrying large amounts of coins was still hard. Which, well, everyone knows the rest.
        dylan604 5y ago
        Right, so again, what do these people think they are solving? There's plenty of logic flaws with the doomsday preppers, but returning to the gold economy is just where I draw the straw. Sure, store all the food, guns/ammo, fuel, water, etc you can, but if the world is that screwed up, we've all seen the movies on how well best laid plans workout.
        deleted 5y ago
        [deleted]
        lazide 5y ago
        See my comment above. It doesn’t have to make sense in our current environment for people to do it. Doing this kind of thing has meant their ancestors survived crazy insane disasters that most others did not, so they are going to keep doing it to some extent no matter what. Think of it as humanities extra parity bits. Most of the time they’re useless, until they’re the only reason we’re still here.
      - rsj_hn 5y ago
        I think the idea is that gold is a universally desired good that can be exchange for money or anything of value in any situation or place. So if you decide to flee the country, five pounds of gold is $150K and can easily be carried in a small backpack. Let's say you keep it in 1 troy oz pieces, so you have 80 of them worth about $1800 each. You can go to any nation on earth, and whatever currency they have, they will be happy to sell it to you for gold. Yes, only in $1800 pieces. That's fine, you can exchange it for whatever local currency is being used as you need it. You can do this anonymously and privately. You don't need to worry about whether the US dollar has collapsed. Gold does go up and down, but it never goes to zero, and tends to do well in crisis situations and maintain value over the long term. It is not - or shouldn't be viewed as -- an "investment", it's insurance. It costs money. Moreover even if you do not flee the country, having assets that you possess - true bearer assets -- is superior than assets others hold for you in a custodial account. How secure is your 401K? Secure until congress passes a law to take some of it. How secure is your bank account? It is as secure as someone who can convince the bank to freeze your account or close your account. So having a bit of gold or cash as a type of hedge for unlikely events makes sense to a lot of people. You have to keep in mind that for a household living in Silesia, between 1880 and 2000, they would have lived through one hyperinflation, two world wars, two revolutions and three uprisings, and four foreign invasions. They would have been ruled by Prussia, Poland, Nazi Germany, Soviet-controlled Poland, finally free Poland. Each of these had their own currency regimes and currency reforms. That household would have been well off having a bit of gold tucked away. They would have been able to trade some of it for food during the Weimar collapse, and to transport some wealth through the dark days of communism -- maybe even bribing someone to let them escape the country with something more useful that worthless zlotys in whichever nation they landed.
    - Spooky23 5y ago
      Those are the folks schnookered by companies that sell gold. Aka suckers. The “real” gold and silver people use it to avoid taxation. The high spreads and illiquidity are less than what you owe the tax guy or your ex-wife.
      - ptero 5y ago
        I don't see either high spreads or illiquidity. At least in the US the spread from reputable dealers is under 1% for bullion; slightly more for coins. It is certainly a feasible (and, in current low interest rate scenario, inexpensive) hedge against catastrophic economic problems.
        christophilus 5y ago
        Where do you find spreads that low? They’re like 10-20% where I am.
        ptero 5y ago
        Using reputable dealers that deliver orders placed online. Strange as it sounds, it is, IMO, one of the better and safer (definitely low commission) ways to get gold. BD Bullion, APMEX are good ones. I did not check very recently, but when I did the difference with spot price were under 1% (slightly higher for APMEX, slightly lower for BD). A friend in Australia mentioned the same ballpark, 1-1.5% spread (combined, not each way). 10-20% is a highway robbery!! An important caveat: this only applies to reasonably large orders, 1 oz or larger. You cannot buy $100 of gold with 1% spread.
        ptero 5y ago
        I stand corrected -- currently, the difference with spot price is about 2% each way. Lower than 10-20%, but much higher than ~0.5% I remember earlier. I suspect this is due to recent gold price volatility, but not sure.
        lazide 5y ago
        The only stuff with that kind of spread are 100oz silver bars or 1oz gold coins, all of which are well outside of feasible for $20/wk folks (unless they are willing and able to save for 2 yrs per coin anyway)
  - anonporridge 5y ago
    bitcoin
  - cinquemb 5y ago
    If one truly doesn't need it for day to day expenses and just saving (assuming its at least over $200), one can: buy some btc at a walmart coinstar kiosk[0] with the cash (or any other cash for bitcoin methods that has been around since ~2009), sell it for eth with bisq network[1], bridge it to avalanche[2] for weth.e and sell for dai.e (decentralized overcollateralized stablecoin to the $) and at least 1 avax (for future gas costs, you can get away with holding less if one watches the fees), and put the dai.e in yieldyak benqi farm[3] (decentralized non custodial overcollateralized protocol) for over %20 APY in dai.e? Might loose a bit to fees getting it on chain(s) (though less than intl money transfers if one is used to that), but should make it back pretty quickly. [0] https://www.reuters.com/business/walmart-allowing-some-shoppers-buy-bitcoin-coinstar-kiosks-2021-10-21/ https://www.reuters.com/business/walmart-allowing-some-shopp... [1] https://github.com/bisq-network/bisq https://github.com/bisq-network/bisq [2] https://bridge.avax.network/ https://bridge.avax.network/ [3] https://yieldyak.com/farms?platform=benqi https://yieldyak.com/farms?platform=benqi
- nullc 5y ago
  Place in a fire/water resistant bag 90% cash, 10% Bitcoin. In the event of hyperinflation the Bitcoin will hopefully gain (or at least preserve value)-- and it can be transferred online, which the cash cannot. (And in the event of a total bitcoin collapse you still have 90%). Re-balance it once a year or so. It doesn't take much to make missing out on the 0.5% interest rate of a high rate savings account into not much of a problem.
  - anonporridge 5y ago
    And bitcoin ATMs that spit out cash are becoming more common if you've been cut off from using traditional banking services and need physical cash, even if the spreads they offer are currently exorbitant.
    - jiggunjer 5y ago
      5% on an ATM in Hong Kong. I'd say that's reasonable.
- PeterisP 5y ago
  It's not a disadvantage if savings accounts pay close to 0%.
- Broken_Hippo 5y ago
  That isn't limited to cash, though, as the money in the bank would have the same loss.
tobyjsullivan 5y ago
Pseudo-relevant anecdote: I wanted to buy a used car a few months ago off someone on Facebook. We were meeting up same day so the easiest method seemed to be cash. I went to the bank to withdraw $7000 and was informed, much to my surprise, that it is impossible to withdraw more than $3000 without 48 hours notice. Suffice it to say, I've been seriously considering the tradeoffs of hoarding cash under my mattress.
- Spooky23 5y ago
  Depends on the bank. Most branches are really sales offices. Usually there’s a few that actually stock cash.
  - dghlsakjg 5y ago
    That’s wild. When I was a teller (15 years ago maybe) we would routinely keep around 7-10k in our drawers, and another 40k as ready money in the day safe. Granted, we were a drive up branch that dealt with commercial/retail so a lot of customers would routinely be dealing with 5k worth of cash. Other branches had similar amounts of cash though. Strange world
    - acheron 5y ago
      Same, though it was about 20 years ago for me. I remember a guy withdrawing $25k in cash one day. That was unusual, which is why I remember it, but it wasn’t a problem either. (We gave it to him in a big sack, and I was disappointed that the sack didn’t have a large $ printed on the side.)
    - anonporridge 5y ago
      I've also been hit by not being able to withdraw more than about $5k cash as a retail customer without multi day notice. I do wonder if it's not all nefarious as cash has become drastically less common over the past couple decades. Still, it's especially interesting because the numbers even 15 years ago are much higher in real terms than today. This is another advantage of inflation. You can set rules like, you have to declare more than $10k worth of assets traveling with you on flights, and every year, the plummeting value of that dollar metric includes more and more people and activities in the surveillance state.
dv_dt 5y ago
But there is also a record level of natural disasters in term of flood and fire. I wonder if an unusual level of cash was destroyed
- anonporridge 5y ago
  Fire/water proof safes aren't terribly expense. Also, safe deposit boxes are an option, which have different security tradeoffs from a safe in your home.
  - XorNot 5y ago
    A safe deposit box is at a bank, at which point, why not just put your money in the bank? And fire-proof safes aren't "fire proof". They're generally rated for a reasonable amount of fire resistance - 1 to 2 hours - which is usually enough time for a house to burn down around them and be extinguished (they also only promise to protect paper, for example). Whether they would survive the inferno of a bushfire, wherein the house is not extinguished, is far less clear.
  - adolph 5y ago
    Previous commentary on Safe Deposit Boxes: https://news.ycombinator.com/item?id=27106695 https://news.ycombinator.com/item?id=27106695
    - anonporridge 5y ago
      Yeah. It's not an either/or situation. It's a both/and. Tradeoffs generally require hedging your bets.
  - vl 5y ago
    Banks close first, for emergency supplies safe deposit boxes are basically useless.
    - anonporridge 5y ago
      Depends on the scenario. If it's a societal event, then yes, you can't rely on safe deposit boxes, just like you can't rely on your bank account. You're better off shoving cash under your mattress and stacking brass and lead. But if it's an individual event, then your home itself might be a target, and safe deposit boxes might mitigate your risk. It's all about tradeoffs.
chiph 5y ago
Hurricane season started in the southeastern US on June 1st. It's not uncommon for folks to have a few hundred in cash for when the power goes out and the credit card terminals aren't working.
- hypertele-Xii 5y ago
  Sometimes the card systems don't work on a normal day. I was checking out food at a supermarket with debit when the card reader crashed. Cashier rebooted it but it complained that I didn't have enough money in the account, which I definitely did. I checked my banking app and it showed as if the transaction had succeeded, but the supermarket couldn't produce a receipt and refused to give me the groceries. When I called the bank they said there's nothing they can do and it would sort itself out in two weeks. The supermarket info desk radio'd that apparently someone else was also having trouble checking out with debit. That was the day I vowed to always withdraw a month's expenses in advance and fight against full computerization of cash. I can imagine someone getting screwed real good having their food budget stuck in a banking error for half a month unable to buy food!
  - mdp2021 5y ago
    Good!!! Now also suppose a "clerical mistake" freezes access to your accounts.
  - chiph 5y ago
    The other advantage to having some cash post-hurricane is in getting your roof repaired. Roofing contractors will put customers paying with cash at the top of their list.
hellbannedguy 5y ago
Plus with fees ($10/month if balance drops below $1500) it sometimes makes sence to close down your bank account. Not to mention close to zero rates on savings.
imroot 5y ago
Slowing down the correction? I had 40K taken by US Bank last year...365 days have passed and they're still coming up with excuses as to why they can't disburse that amount to me. Thank god that I had the insight to start a savings account at a Credit Union about 10 years ago, and moved half of my paychecks there via direct deposit. I now keep cash in a safe (what safety am I getting keeping that cash in a CD at .05%?) as my savings account.
- anonporridge 5y ago
  Don't forget civil forfeiture. The government can legally just take your wealth from you, and you have to prove that you it came from legit and legal means, and they can drag their feet even when you produce proof. https://www.aclu.org/issues/criminal-law-reform/reforming-police/asset-forfeiture-abuse https://www.aclu.org/issues/criminal-law-reform/reforming-po...

mbg721 5y ago

Physical cash that buys less and less with each passing day is not as useful, though.

lazide 5y ago
If you don’t get paid interest at a bank, and no brokerage is going to take you on (or you don’t trust them), then what else are your options?
- posnet 5y ago
  I mean isn't that the reason preppers love gold/silver bullion?
  - lazide 5y ago
    Yup, though the minimum ‘buy in’ per unit without getting raked over the coals with high spread products is too high for many people. If you’re trying to set aside $20/wk, silver is terrible and good luck with Gold.
  - dylan604 5y ago
    i've never understood how this would work in these doomsday scenarios. are people going to walk around with scales to weigh the gold for every transaction as well as test the purity of the gold? are they going to mint their own coins? I just don't see how it's supposed to work
    - deleted 5y ago
      [deleted]
    - XorNot 5y ago
      Modern banking was also basically invented because of this very problem - gold was inconvenient so you had gold coins with insigna's which promised a standard weight of gold and could be reasonably trusted due to being hard to forge. Which gave way to IOUs from gold smiths, since carrying large amounts of coins was still hard. Which, well, everyone knows the rest.
      - dylan604 5y ago
        Right, so again, what do these people think they are solving? There's plenty of logic flaws with the doomsday preppers, but returning to the gold economy is just where I draw the straw. Sure, store all the food, guns/ammo, fuel, water, etc you can, but if the world is that screwed up, we've all seen the movies on how well best laid plans workout.
        deleted 5y ago
        [deleted]
        lazide 5y ago
        See my comment above. It doesn’t have to make sense in our current environment for people to do it. Doing this kind of thing has meant their ancestors survived crazy insane disasters that most others did not, so they are going to keep doing it to some extent no matter what. Think of it as humanities extra parity bits. Most of the time they’re useless, until they’re the only reason we’re still here.
    - rsj_hn 5y ago
      I think the idea is that gold is a universally desired good that can be exchange for money or anything of value in any situation or place. So if you decide to flee the country, five pounds of gold is $150K and can easily be carried in a small backpack. Let's say you keep it in 1 troy oz pieces, so you have 80 of them worth about $1800 each. You can go to any nation on earth, and whatever currency they have, they will be happy to sell it to you for gold. Yes, only in $1800 pieces. That's fine, you can exchange it for whatever local currency is being used as you need it. You can do this anonymously and privately. You don't need to worry about whether the US dollar has collapsed. Gold does go up and down, but it never goes to zero, and tends to do well in crisis situations and maintain value over the long term. It is not - or shouldn't be viewed as -- an "investment", it's insurance. It costs money. Moreover even if you do not flee the country, having assets that you possess - true bearer assets -- is superior than assets others hold for you in a custodial account. How secure is your 401K? Secure until congress passes a law to take some of it. How secure is your bank account? It is as secure as someone who can convince the bank to freeze your account or close your account. So having a bit of gold or cash as a type of hedge for unlikely events makes sense to a lot of people. You have to keep in mind that for a household living in Silesia, between 1880 and 2000, they would have lived through one hyperinflation, two world wars, two revolutions and three uprisings, and four foreign invasions. They would have been ruled by Prussia, Poland, Nazi Germany, Soviet-controlled Poland, finally free Poland. Each of these had their own currency regimes and currency reforms. That household would have been well off having a bit of gold tucked away. They would have been able to trade some of it for food during the Weimar collapse, and to transport some wealth through the dark days of communism -- maybe even bribing someone to let them escape the country with something more useful that worthless zlotys in whichever nation they landed.
  - Spooky23 5y ago
    Those are the folks schnookered by companies that sell gold. Aka suckers. The “real” gold and silver people use it to avoid taxation. The high spreads and illiquidity are less than what you owe the tax guy or your ex-wife.
    - ptero 5y ago
      I don't see either high spreads or illiquidity. At least in the US the spread from reputable dealers is under 1% for bullion; slightly more for coins. It is certainly a feasible (and, in current low interest rate scenario, inexpensive) hedge against catastrophic economic problems.
      - christophilus 5y ago
        Where do you find spreads that low? They’re like 10-20% where I am.
        ptero 5y ago
        Using reputable dealers that deliver orders placed online. Strange as it sounds, it is, IMO, one of the better and safer (definitely low commission) ways to get gold. BD Bullion, APMEX are good ones. I did not check very recently, but when I did the difference with spot price were under 1% (slightly higher for APMEX, slightly lower for BD). A friend in Australia mentioned the same ballpark, 1-1.5% spread (combined, not each way). 10-20% is a highway robbery!! An important caveat: this only applies to reasonably large orders, 1 oz or larger. You cannot buy $100 of gold with 1% spread.
        ptero 5y ago
        I stand corrected -- currently, the difference with spot price is about 2% each way. Lower than 10-20%, but much higher than ~0.5% I remember earlier. I suspect this is due to recent gold price volatility, but not sure.
      - lazide 5y ago
        The only stuff with that kind of spread are 100oz silver bars or 1oz gold coins, all of which are well outside of feasible for $20/wk folks (unless they are willing and able to save for 2 yrs per coin anyway)
- anonporridge 5y ago
  bitcoin
- cinquemb 5y ago
  If one truly doesn't need it for day to day expenses and just saving (assuming its at least over $200), one can: buy some btc at a walmart coinstar kiosk[0] with the cash (or any other cash for bitcoin methods that has been around since ~2009), sell it for eth with bisq network[1], bridge it to avalanche[2] for weth.e and sell for dai.e (decentralized overcollateralized stablecoin to the $) and at least 1 avax (for future gas costs, you can get away with holding less if one watches the fees), and put the dai.e in yieldyak benqi farm[3] (decentralized non custodial overcollateralized protocol) for over %20 APY in dai.e? Might loose a bit to fees getting it on chain(s) (though less than intl money transfers if one is used to that), but should make it back pretty quickly. [0] https://www.reuters.com/business/walmart-allowing-some-shoppers-buy-bitcoin-coinstar-kiosks-2021-10-21/ https://www.reuters.com/business/walmart-allowing-some-shopp... [1] https://github.com/bisq-network/bisq https://github.com/bisq-network/bisq [2] https://bridge.avax.network/ https://bridge.avax.network/ [3] https://yieldyak.com/farms?platform=benqi https://yieldyak.com/farms?platform=benqi
nullc 5y ago
Place in a fire/water resistant bag 90% cash, 10% Bitcoin. In the event of hyperinflation the Bitcoin will hopefully gain (or at least preserve value)-- and it can be transferred online, which the cash cannot. (And in the event of a total bitcoin collapse you still have 90%). Re-balance it once a year or so. It doesn't take much to make missing out on the 0.5% interest rate of a high rate savings account into not much of a problem.
- anonporridge 5y ago
  And bitcoin ATMs that spit out cash are becoming more common if you've been cut off from using traditional banking services and need physical cash, even if the spreads they offer are currently exorbitant.
  - jiggunjer 5y ago
    5% on an ATM in Hong Kong. I'd say that's reasonable.
PeterisP 5y ago
It's not a disadvantage if savings accounts pay close to 0%.
Broken_Hippo 5y ago
That isn't limited to cash, though, as the money in the bank would have the same loss.

tobyjsullivan 5y ago

Pseudo-relevant anecdote: I wanted to buy a used car a few months ago off someone on Facebook. We were meeting up same day so the easiest method seemed to be cash. I went to the bank to withdraw $7000 and was informed, much to my surprise, that it is impossible to withdraw more than $3000 without 48 hours notice. Suffice it to say, I've been seriously considering the tradeoffs of hoarding cash under my mattress.

Spooky23 5y ago
Depends on the bank. Most branches are really sales offices. Usually there’s a few that actually stock cash.
- dghlsakjg 5y ago
  That’s wild. When I was a teller (15 years ago maybe) we would routinely keep around 7-10k in our drawers, and another 40k as ready money in the day safe. Granted, we were a drive up branch that dealt with commercial/retail so a lot of customers would routinely be dealing with 5k worth of cash. Other branches had similar amounts of cash though. Strange world
  - acheron 5y ago
    Same, though it was about 20 years ago for me. I remember a guy withdrawing $25k in cash one day. That was unusual, which is why I remember it, but it wasn’t a problem either. (We gave it to him in a big sack, and I was disappointed that the sack didn’t have a large $ printed on the side.)
  - anonporridge 5y ago
    I've also been hit by not being able to withdraw more than about $5k cash as a retail customer without multi day notice. I do wonder if it's not all nefarious as cash has become drastically less common over the past couple decades. Still, it's especially interesting because the numbers even 15 years ago are much higher in real terms than today. This is another advantage of inflation. You can set rules like, you have to declare more than $10k worth of assets traveling with you on flights, and every year, the plummeting value of that dollar metric includes more and more people and activities in the surveillance state.

dv_dt 5y ago

But there is also a record level of natural disasters in term of flood and fire. I wonder if an unusual level of cash was destroyed

anonporridge 5y ago
Fire/water proof safes aren't terribly expense. Also, safe deposit boxes are an option, which have different security tradeoffs from a safe in your home.
- XorNot 5y ago
  A safe deposit box is at a bank, at which point, why not just put your money in the bank? And fire-proof safes aren't "fire proof". They're generally rated for a reasonable amount of fire resistance - 1 to 2 hours - which is usually enough time for a house to burn down around them and be extinguished (they also only promise to protect paper, for example). Whether they would survive the inferno of a bushfire, wherein the house is not extinguished, is far less clear.
- adolph 5y ago
  Previous commentary on Safe Deposit Boxes: https://news.ycombinator.com/item?id=27106695 https://news.ycombinator.com/item?id=27106695
  - anonporridge 5y ago
    Yeah. It's not an either/or situation. It's a both/and. Tradeoffs generally require hedging your bets.
- vl 5y ago
  Banks close first, for emergency supplies safe deposit boxes are basically useless.
  - anonporridge 5y ago
    Depends on the scenario. If it's a societal event, then yes, you can't rely on safe deposit boxes, just like you can't rely on your bank account. You're better off shoving cash under your mattress and stacking brass and lead. But if it's an individual event, then your home itself might be a target, and safe deposit boxes might mitigate your risk. It's all about tradeoffs.

chiph 5y ago

Hurricane season started in the southeastern US on June 1st. It's not uncommon for folks to have a few hundred in cash for when the power goes out and the credit card terminals aren't working.

hypertele-Xii 5y ago
Sometimes the card systems don't work on a normal day. I was checking out food at a supermarket with debit when the card reader crashed. Cashier rebooted it but it complained that I didn't have enough money in the account, which I definitely did. I checked my banking app and it showed as if the transaction had succeeded, but the supermarket couldn't produce a receipt and refused to give me the groceries. When I called the bank they said there's nothing they can do and it would sort itself out in two weeks. The supermarket info desk radio'd that apparently someone else was also having trouble checking out with debit. That was the day I vowed to always withdraw a month's expenses in advance and fight against full computerization of cash. I can imagine someone getting screwed real good having their food budget stuck in a banking error for half a month unable to buy food!
- mdp2021 5y ago
  Good!!! Now also suppose a "clerical mistake" freezes access to your accounts.
- chiph 5y ago
  The other advantage to having some cash post-hurricane is in getting your roof repaired. Roofing contractors will put customers paying with cash at the top of their list.

hellbannedguy 5y ago

Plus with fees ($10/month if balance drops below $1500) it sometimes makes sence to close down your bank account. Not to mention close to zero rates on savings.

imroot 5y ago

Slowing down the correction? I had 40K taken by US Bank last year...365 days have passed and they're still coming up with excuses as to why they can't disburse that amount to me. Thank god that I had the insight to start a savings account at a Credit Union about 10 years ago, and moved half of my paychecks there via direct deposit. I now keep cash in a safe (what safety am I getting keeping that cash in a CD at .05%?) as my savings account.

anonporridge 5y ago
Don't forget civil forfeiture. The government can legally just take your wealth from you, and you have to prove that you it came from legit and legal means, and they can drag their feet even when you produce proof. https://www.aclu.org/issues/criminal-law-reform/reforming-police/asset-forfeiture-abuse https://www.aclu.org/issues/criminal-law-reform/reforming-po...