The post-Disaster Cash Economy

The aftermath of Superstorm Sandy has been a learning opportunity for preppers and non-preppers alike. Here at Prep-Blog, and of course on many other prepping blogs and websites, we often speculate about the difficulties that might be caused by a major storm or another disaster of similar magnitude. Now we are seeing these difficulties play out in real time. And the cause was not a situation that could be termed TEOTWAWKI (The End Of The World As We Know It). It was a relatively ordinary, even if severe and unusual, natural disaster. I’m sure we’ll be talking about the effects of this storm, off and on, for a long time. But many other types of disasters would, in all probability, cause similar difficulties.

For this post, I’d like to focus on the effect on economics, not nationwide, but at the level of the individual household.

The storm knocked out power to millions of persons. This caused many businesses to close. Those that were open often had a “Cash Only” sign on the door. No checks, no debit cards, no credit cards — cash only or no sale. In addition, many banks were closed, and the ATMs were inoperable without electricity. If you need supplies, and a nearby store is selling those supplies, you still can’t have them, unless you have enough cash. Our economy depends heavily on electronic communication for its commerce. Most people have a relatively small amount of cash in their wallet, purse, and home. If the aftermath of a disaster keeps power out for days or weeks, you will run out of cash.

The best way to prepare for this possibility is, I suppose, to keep a supply of cash in a safe in your home. The safe should be hidden from view, in case you must bug out and your home is looted. (Though I suppose you would take the cash with you when bugging out.) The cash should be in small bills, in case the merchant does not have exact change: $20s, $10s, and $5s are sufficient, I would think. The $100 and $50 bills might be looked at with suspicion if the aftermath of a disaster has a high crime rate.

Another problem in the realm of post-disaster personal economics is work and pay. If your place of business is closed, due to damage or power outages, you might not be paid. Eventually, you will run out of stored cash. The situation is difficult to prepare for. Banks should reopen sooner than many other businesses, so you may have access to your bank account. If your place of business is trying to reopen, you might ask if there is anything you can do to get the business up and running again.

Some businesses will go out of business due to Superstorm Sandy. This result is inevitable for any large-scale disaster. At any time, in any region that has very many businesses, there will be a range of situations. Some businesses will be thriving, some will be struggling, some will be near the point of collapse. Add any major disaster to the normal range of difficulties that businesses face, and some will go out of business that otherwise might have survived.

On the positive side, as Butch pointed out to me in one of our many prepping conversations, a disaster like Sandy offers the opportunity for work: clean-up, repair, rebuilding, etc. If you have some manual labor skills and perhaps a pick-up truck with some tools, you might be able to find some hourly work. Older residents, who cannot do the work needed to fix their property, might hire you. Local companies that offer repair and rebuilding services might take you on as a temporary employee (or as an independent contractor).

Food and supplies may be difficult to obtain after a large-scale disaster. Grocery stores will not have power, which means all the refrigerated and frozen foods will go bad. Stores will be sold out of the most-needed supplies: batteries, candles, propane, bottled water, and many other items. Here is where the storage of supplies, in advance, by preppers proves itself wise. Everyone else will be running around trying to find food, water, lighting, etc. But if you are well-prepared, you will have much less to worry about.

– Thoreau

3 Responses to The post-Disaster Cash Economy

  1. We often point out that having cash on hand is a good thing in order to buy food and supplies before and during an event but may be far more important post event as the aftermath of Hurricane Sandy demonstrates.

  2. I like that you are mentioning Large amounts of cash. So many preppers seem to consentrate on gold and silver. which don’t get me wrong is great for long term event. But there not taking gold at the sunoco station. You want gas for your generator it’s cash baby.

    Short term cash and food supplies go a long way. I bet a couple days worth of canned goods could buy a nice flat screen about now.

  3. Cash is king whenever the power goes out or the computers go down in a regional disaster, so it’s good to have some on hand for sure. Gold and silver have little use as money today when the US dollar is the reserve currency of the world. I think PM’s come into play first in an economic crisis, when more countries realize our currency is essentially this – http://www.informationliberation.com/?id=36655

    But even if there isn’t an economic crisis, PM’s are still the last important survival items to acquire imo. No matter what might happen, they’ll be items and services for sale. PM’s are the best way to ensure you’ll have money for trade when direct barter isn’t possible.