Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on May 7, 2020
Responding to Collapse, Part 16: Shortages of Money
A few posts back I said that shortages of electrical power, diesel fuel and money will be at the heart of the troubles that lie ahead for small remote communities as collapse progresses. I am interested in that sort of community because that is where I am recommending that you take refuge in order to ride out collapse (and where I have already taken refuge). I’ve covered electrical power in parts 10 to 14 of this series and diesel fuel in part 15, so that leaves money for this post and the next one.
We’ll be looking at shortages of money from two angles here. First, in this post, shortages that occur when you have money on deposit at the bank, or credit prearranged with the bank, but can’t access it due to problems with the banking system. Second, in the next post, shortages that occur when you have trouble earning enough money to live on because of problems with the economy.
The song says, “money makes the world go round”. You could certainly be forgiven for believing that, especially given the increased commodification of everything that has been going on, and the growth of the financial sector of the economy in the last few decades. I don’t agree, though. Drawing from the writings of Dr. Tim Morgan on “surplus energy economics”, I would say that it is energy that makes the world, or at least the economy, go round.
We’ll get back to the role of energy in the economy in my next post, but first let’s look at money itself. Money is really just a system of tokens we use as a medium of exchange, a unit of account, and a store of value.
Conventional economists tell stories about how before money was invented, people had to barter for what they needed but couldn’t produce for themselves, and this was very inconvenient. In fact, as an anthropologist would tell you, barter was used only on those rare occasions when they were trading with strangers, and often with the intent of gaining a (possibly unfair) advantage. They were strangers, after all.
Most people usually dealt only with people they knew and didn’t want to cheat. In small groups (less that Dunbar’s number) there was no need of money since people just did what was needed, didn’t attempt to keep precise accounts it, and accumulated little of value to store. This was primitive communism which worked on the principle of “from each according to their ability and to each according to their needs.”
As people began to live in larger groups, it proved useful to have some way of keeping track of transactions with people outside one’s immediate group. I’m not going to go into the historical details here (read Graeber’s book if you are interested), but eventually we arrived at the system we use now.
Today money is created when a bank loans it out as debt. The main thing about money created as debt is that it can increase flexibly as the economy grows, where money based on precious metals is limited by the scarcity of those metals. In order to make a profit, which is after all the reason for their existence, banks insist that those loans have to be paid back with interest. This means that the economy must continually grow in order to cover that interest. As long as the economy is growing, this system works quite well. Indeed that is why we adopted it, to accommodate the growth stimulated by fossil fuel energy.
Only a tiny fraction of money ever exists as coinage or bank notes—mostly it just consists of entries in the banks’ accounting software. Coinage confuses the issue of what money really is, since coins at least appear to be made of precious metals. Many people believe that money based on precious metals (gold, silver) has some real value, because of their rarity and the difficult of mining them. They call our modern debt based money “fiat currency” because its value is based solely on your confidence in it. I disagree. Take gold as an example—it has some limited industrial use because of its low electrical resistance and high corrosion resistance, but its current high market value is based almost entirely on what people think it is worth. In fact all money is an abstraction and its value is based only on what value people agree to give it.
Indeed the financial sector of the economy is largely based on trading in money itself as well as stocks, bonds, and derivatives. Much of the so called wealth in the world is based on these things, and their value is almost entirely based on public confidence in them. If the confidence evaporates, so does the wealth.
I would define wealth as an enforceable claim of ownership on things with real value, or an enforceable claim on future productivity, yours or someone else’s. The value of money in the bank or investments, is based on a claim on future productivity, and if that productivity decreases, so does the value of your claim on it. And, of course, if your claims become un-enforceable, as they might if the financial sector or society itself experience disruption, your “wealth” is worth nothing.
In the last few decades the switch over from primitive communism to modern neoliberal capitalism has been just about completed. The idea of an “immediate group” has largely disappeared, much to our loss, and money mediates almost all relationships, even to some extent within nuclear families. This means that we are very much dependent on the systems which provide us with money, and via that money, the necessities of life.
Today most of us access the cash we have on deposit at a bank via an automatic teller machine (ATM) or less commonly via a human teller at the local bricks and mortar office of our bank. And more and more we use debit cards to eliminate actual cash altogether, accessing our bank deposits directly at point of sale terminals. Many of us also have credit cards allowing us to access credit up to a prearranged limit at ATMs or point of sale terminals. Some of us, who are undertaking rennovation projects or operate small businesses for instance, have arranged lines of credit at the bank, at much lower interest rates than credit cards. This form of credit is usually accessed via cheques or online transfers.
But having cash on deposit or prearranged credit is no good if you can’t access it. Ready access to money relies on infrastructure that can fail quite easily. A local grid failure or damage to communications cables can knock out ATMs, point of sale terminals and the banks themselves—you may have noticed that, when you are dealing directly with a human teller, they are making entries in a computer while dispensing or receiving cash. Cash itself has to be delivered regularly to both ATMs and banks and shortages of diesel fuel or storms closing the highways can stop those deliveries.
Financial crashes, recessions or depressions can cause banks to fail and take your money down a financial black hole with them. And during such crises the banks who don’t fail get very cautious in their dealings with each other and the public. This is like throwing sand in the gears of the economy, and makes the situation worse. In such an event, you can except that your access to credit will dry up and that even your access to cash on deposit will be limited, since the banks will be concerned about nervous people deciding to withdraw all their money, in what is known as a “run on the bank”. The banks, of course, don’t have enough cash on hand to cover all the deposits that people have made, and would likely limit you to taking out only a few hundred dollar a week, at most.
The simplest preparation for these sort of problems is having a chunk of cash on hand, enough to see you through a few days or weeks at the worst. And having a stock of food and other essentials on hand so you don’t need so much money to spend in times when the banking system isn’t working.
A lot of people seem to think that a long term failure of the financial sector would be the end of the world, or at least of the economy, and believe that it is the form that collapse will take. But remember an economy is just a system in which the things people need are made and exchanged. Among small numbers of people who know each other (or can quickly come to know each other), and certainly in emergencies, it is quite possible for such activity to continue without anyone keeping track of it. The thing, of course, is to have close to hand the resources from which to make what is needed. In large population centres, once shipments stop, this quickly becomes difficult. In small agricultural communities, it need not be so much of a problem.
In communities of more than a couple of hundred people, it would be useful to print and issue a local currency and set up accounting systems separate from the no longer functioning banks. The idea that we can’t get by without banks irks me—they currently have a monopoly on the services they provide and on which we depend—and they make a generous profit in that business. If they can no longer do their job, then we should feel free to replace them as needed.
As my regular readers know, I believe that collapse is actually something that happens quite slowly, has been going on for the last 50 years or so, and will be continuing for years or probably decades to come. But, when it comes to money, I can see why many people seem to have their hearts set on a fast collapse. Such a collapse would be much harder, of course, but at least your creditors, landlords, etc. would be collapsing with you and wouldn’t be able to come after you for what you owe them. Leaving you free to concentrate on the business of survival.
In a slow collapse there will be a period of time (already started, actually) when the banks and landlords still want their pound of flesh, but many people no longer have jobs, or good enough jobs, to pay them.
That will be the subject of my next post.
As I have been writing this post, the corona virus, COVID-19, has been spreading over the world. I’ve done a fair bit of reading on it recently, and I am getting disgusted with the amount of fear, uncertainty and doubt (FUD) that is being spread around by people who stand to gain by attracting more visitors to their websites. This is uncertainly not conducive to an intelligent response.
This a new disease and there is much we do not yet know about it, much that we will only know after the dust has settled. I think this sort of uncertainty is going to be characteristic of many of the challenges we will face as collapse deepens. My hope is that this blog will be conducive to a calm and constructive response to such challenges. Here are a few links that I hope will help when it comes to responding to COVID-19:
- 5 lessons about COVID-9 from doctor who led WHO mission to China, with a link to an “ask me anything session” on CBC Radio’s “Cross Country Check Up” call in show, Dr. Bruce Aylward, senior adviser to the World Health Organization’s director general, led the WHO’s COVID-19 mission to China. Based in Geneva, he’s originally from St. John’s, N.L.
- A live map of the spread of the virus, from Johns Hopkins CSSE
- How to prepare for coronavirus in the U.S. (Spoiler: Not sick? No need to wear a mask.) By Lateshia Beachum, Alex Horton and Reis Thebault in the Washington Post.
That last link is behind a paywall, so I’m including a link with advice to help you get past paywalls in general.. Just part of my anarcho-communist approach to life.
Doomstead Diner by Irvine Mills
24 Comments on "Responding to Collapse, Part 16: Shortages of Money"
Theedrich on Thu, 7th May 2020 5:18 pm
Another insane Dem demand: hire 100K “tracers.” Instantly. These new, tax-fed (with inflated $trillions) featherbedders would supposedly track down all contacts of anyone who tested positive for the ChiCom bug and get them to self-quarantine.
This deranged project would, of course, not be confined to the virus. No. It would include demanding to know race, political-party affiliation, sexual preferences, any indications of prejudice against “protected groups,” degree of political correctitude, and anything else the neo-Commies could dream up.
Objectors would be re-educated in a Gulag. In other words, immediate tyranny.
Welcome to Mao Zedong redux.
JuanP on Thu, 7th May 2020 5:45 pm
I had the pleasure of working with hundreds of young Japanese, mostly women, when I helped train Yoga teachers. I helped train thousands of teachers from all over the world over a handful of years. I would interact with them 6 days a week from sunrise to sunset for 8 consecutive weeks. I found the experience absolutely fascinating. The Japanese were always the best students, with a discipline, perseverance, and willpower that set them apart from the rest. One of the most surprising things was, that while all the other students from all over the world were having a lot of sex in spite of the fact that it was forbidden, the Japanese never, ever did. I brought this up with many of them, and realized they simply had no interest or curiosity regarding sex; I found this fascinating. The Japanese young are the most asexual group of people I have ever met.
JuanP on Thu, 7th May 2020 5:50 pm
Well, the virus has reached my personal life. A nurse assistant friend of ours tested positive. She works at Jackson Memorial Hospital, the largest hospital in Miami.
She spent the whole day at the farm on Tuesday volunteering with the harvest, started feeling sick on Wednesday, was hospitalized and tested on Thursday, and the test result just came back positive. We knew she was at high risk of I being infected because she has been caring for COVID-19 patients. My wife and I spent several hours working with her on Tuesday. We very carefully practiced spatial distancing, but we could both be infected anyway, of course. I would welcome our being infected now to get it over with and because the healthcare system in Miami is not overwhelmed yet. My wife and I will be monitoring our temperatures hourly for the next two weeks. We are moving to the farm or the sailboat and will quarantine ourselves there. I guess I will be here a lot more the next two weeks.
Don’t get your hopes up, forum, I am extremely likely to survive and continue bugging you with my socks and ID theft, as I see it, for many years to come. LOL!
makati1 on Thu, 7th May 2020 6:41 pm
“…small remote communities …I am recommending that you take refuge (there) in order to ride out collapse…”
BINGO! Been there! Done that! relaxing in my retirement. Even using my $1,200 to help my neighbors. ^_^
JuanP on Thu, 7th May 2020 6:52 pm
Mak, you are in the worst possible place when collapse
Comes. :O. I will pray for you.
Anonymouse on Thu, 7th May 2020 7:08 pm
Shut up exceptionalturd. Holy fook are you ever stupid. Go find something useful to do with your worthless life. Here is a suggestion, how about freeing the surviving animals on that horror-show ‘farm’ of yours. Then go put shotgun in your mouth.
OR, you can do what you always do Be a complete, full-time douche-bag on the internet. Making sock posts and ID theft posts that fool absolutely no one.
What a complete shitter you are. I take that back, even shit can be useful. Unlike you.
makati1 on Thu, 7th May 2020 7:45 pm
Anon, he is sooooo obvious that it is really funny and he is too stupid to realize it.
Duncan Idaho on Thu, 7th May 2020 8:53 pm
Goldman Sachs economist Spencer Hill:
We estimate nonfarm payrolls declined by 24 million in April.
…
We estimate the unemployment rate rose from 4.4% to 14.0%.
(and the Dow will be up– the Dog Track is fun!)
Davy on Fri, 8th May 2020 12:55 am
We are not stupid makato.
dumbass
Abraham van Helsing on Fri, 8th May 2020 3:07 am
The left has to admit it is not inspired by Joe Biden:
https://www.spiegel.de/politik/ausland/us-demokraten-wer-ist-schon-von-joe-biden-begeistert-a-6521de44-c5ed-46e2-abdd-c8bd18878a9b
If Hillary couldn’t beat Trump, why would Joe?
It remains to be seen if Corona can beat Trump. Corona obviously was not his fault and he can point to similar disastrous economic results in the rest of the world. And then there is this Biden “sex-scandal”. Furthermore it is difficult to see which Democrat could take over from Biden.
Cloggie on Fri, 8th May 2020 5:01 am
Corona, who is best at “flattening the curve”:
https://twitter.com/Scientists4EU/status/1256905753077694464/photo/1
You could also say: who is best at postponing the execution. As long as there is no vaccine, the current corona champs need to keep the lock-down in place, otherwise they will have exactly the same numbers as UK/UK/Sweden, etc.
Abraham van Helsing on Fri, 8th May 2020 1:04 pm
Invaders show no respect for UK police:
https://twitter.com/harvingtonTR/status/1257967317125865472?s=20
SocialRevolutionComing on Fri, 8th May 2020 1:39 pm
I have noticed during my grocery shopping that people of colour, black, arab, seem to know that COVID is a hoax and are not stressed about this.
Who is really stressed about this COVID hoax, the pathetic feminized White man like the guy in the video above. The White man look all scare, loss and paralyzed with fear. The brown people seem relax and OK.
The fuck elite are just pathetic pieces of shit. They thought that brown people were as as submissive as Whites people are. Guess what, brown people are not as submissive as the White male. The fuck it up again with this COVID hoax. They cannot admit that races are difference.
Duncan Idaho on Fri, 8th May 2020 1:50 pm
“In this time of global pandemic and Great Depression economics, it seems almost quaint to think back just a few months and remember simpler days. Once upon a time, we were all consumed with the impeachment trial of the president of the United States, and worried about whether or not he had been bamboozled into betraying the nation to its cunning adversary, Vladimir Putin. It all seems so far away now as we face the daily onslaught of statistics showing Americans dying by the tens of thousands and 30 million people out of work.
But then, the Russia investigation and the Ukraine scandal were really just an earlier chapter of the same story — the Donald Trump magnum opus called “American Carnage.” One atrocity leads inexorably into another.”
r on Fri, 8th May 2020 2:57 pm
SocialRevolutionComing on Fri, 8th May 2020 1:39 pm
The brown people seem relax and OK.
O_RLY? darkie supertard president *muzie* hussein omama said no mention of radical muzzies
and you supertard?
no mention of supremacist muzzies in video about
ask yourself cui bono? muzzies
muzzie is facebook censor. we’re being conditioned to wear the bag using the muzzielove virus
hope lib fem are happy with the bag
everyone loves muzzk ck. the lib fem will enjoy muzzie ck, 4 lib fem women and one filthy muzie who wear dress
I AM THE MOB on Fri, 8th May 2020 3:00 pm
Social
I think they have two weeks and if everything isnt open the tide could turn. and as things open up the fear wears off.
I AM THE MOB on Fri, 8th May 2020 3:03 pm
Social
MASKS are the new “CHAINS”.
They want us to go out and declare “I’m your slave” because of a fake flu..
SocialRevolutionComing on Fri, 8th May 2020 3:25 pm
some people thinks that in Quebec that we need a tribunal to judge politicians crime against humanity. Health minister in Quebec was shaking during a press conference today.Prime minister was absent.
This a comment I left n the video:
Oui, ça prends un tribunale incluant la peine de mort. Si un ingénieur se trompe dans ses calculs ou il est incompétent et cela cause la mort de plusieurs personnes , il peut se retrouver en prison. Le même chose pour Arruda, Legault and Guibault. Sa devrait être le même chose pour les décideurs politiques. La peine de mort est donc justifier si ils sont trouvé coupable parce qu’il ont beaucoup plus de pouvoir que le peuple.
Translated in english with google
Yes, it takes a tribunal including the death penalty. If an engineer is wrong in his calculations or he is incompetent and this causes the death of several people, he can end up in prison. The same goes for Arruda, Legault and Guibault. Its should be the same for policy makers. The death penalty is therefore justified if they are found guilty because they have much more power than the people.
https://www.youtube.com/watch?v=LErAD9vytP4
r on Fri, 8th May 2020 3:28 pm
the best way to wear your mask and most effective against muzzielove virus is to demand amputation of whitey supertard scientific supremacist “thunderf00t”. This would be the shot heard around the world the way it was in Lexington Green
why would anyone care what high British english muzzie lovers say? amputation is love, just hang him up and slice them off like how you prepare a whole chicken go around the joints sockets and get at the tendon
when this supertard imposed self quarantine i said it smellz. after we amputate we impose love for (((supremetard)))
problme solved.
r on Fri, 8th May 2020 3:37 pm
the beervirus/muzzielove virus is just a virus that attack the people with compromised immunity, which means immune senessence with faulty detection and activate of inate immunity and also failure to activate adaptive immunity. meaning the person is near death to start with. instead of demanding doctors to focus on long term proactive care for these people, they are trained to fix the symptoms, leaving immunity compromised. they pockeded the money so thye dont’ care .
who pay, we pay getting locked down
who benefits, muzzies
vaccines doesn’t help either since virus detection no longer works and b cells are exhausted anyways so there’s nothing to activate using vaccines.
joe on Fri, 8th May 2020 3:43 pm
NordStream2 to be finished soon. Merkels inexplicably long ‘hand over’ of power make sense only in the context of the geopolitically sensitive requirement to complete this strategically vital project to become energy independent of the west and to make France energy depedent on Germany. It will then be economically safe to deal with those lazy spendthrift southern europeans. With Turkstream open, awaiting customers in Europe to simply plug themselves in it seems no accident that Greece has opened up diplomatic relations with Syria. ( My God Putin is tying the EUSSR up in knots.)
Currently the situation appears to be that that Germany is determined to be only s fairweather friend to the US, happy to allow the US to protect it from those bad guys in Moscow but happy to snub the US geopolitically. The UK, determined to remain a staunch US ally as it seeks to flee the mess that the EUSSR economy is becoming is taking a massive risk on the trade deal. Currently the Dems who seem not to care that Germany/Russia/China are forming an economic and energy trade bloc against the US are engaged fully in Trump Derangement Syndrome to the point where they are willing to frustrate a UK/US trade deal, weaken the US global position and lose out as a global leader.
While China still completes a coal fired plant every week and Germany desperately clamours to plug into Russias trillions of meters of gas, we are expected to believethe lie that the US has friends in Europe. Useful idiots in US social media, sjws, culture wars, etc of the same type that were used in China during Maos time are breaking out in the US. China knows how to use students to cause demoralisation in societies, they did it with their little red book in the 1960s. China thinks the US is a paper tiger, they flatter you and pay you off and say ‘yes sir’, but they hate you America, so does Merkel. NordStream2 will be finished soon.
SocialRevolutionComing on Fri, 8th May 2020 4:25 pm
News from Asia nations. They want to keep people in fear and make sure people don’t talk to each other. Robot will now police people.
They will never fully reopen the economy.
https://www.youtube.com/watch?v=5mn3KXvqdQc
joe on Fri, 8th May 2020 4:35 pm
you say ‘they’, you wouldnt have the balls to smash that shit up? if we are already slaves, then you have nothing to lose by dying and everything to gain by revolting. companies are doing everything they can to comply with these bullshit coronavirus riles cause they want to reopen. if you vote republican this year then they throw all that shit in the bin and get back to football and beer and mc Donalds. if you vote dem, you will get a pro sterile Islamophile gender neutral socially distanced future, its up to you man not ‘them’. its your country, evdn if you have to burn everything in it to prove it.
whoa supremacist muzzies jerk i knew some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeeeeeeeeeeed giveaway my neighbor got big testicles because we see this dude everyday we ate ribs with this dude on Fri, 8th May 2020 4:49 pm
this is my master treaties. i don’t waste time on this forum. it’s lame. this treaties is about love for supremacist muzzies
muzzie bribe went with isis to make babies and now want to go back. what the world going to. this is ok but supertard big muzzie beard SAWS swt pbuh is banned from UK and harrassed by AA.
muzzie curse kufar in vice documentary about ramadan but subtitle is excluded for the love of supremacist muzzie. this happens in deerfield michigan. muzzie said it’s peaceful but at the end acted as if typical soft and cudly muzzies do. very ironic
the knights of columbus were real head breakers true guineas 70000 years after an irishman could not get a job we got the presidency may he rest in peace. the kennedies were muzie lovers so (((supremetard))) didnt’ protect them and they die slowly.
but now the irishman is back and whitey supertard president michael flynn (the honest one) is going to love muzzies and amputate them all. love can be in many forms and bringing muzzies closer to muhamad the pedifler to get virgins and boys is a form of ultimate love.
one has to wonder why little tiny small big brother joe never mentioned whitey supertard president michael flynn and why the investigation wasn’t about muzzies but that’s the goal, destroy muzzie lovers by going after them in some other ways – like love for putin
cui bono? one wonder the extend of muzzie infiltration and why did little small tiny big brother joe “reverted” to muzzie like john brennen
now it is ramadan and very peaceful. so far 72 kabooms and 262 went to see muhadmad the pedifler. after 15 days, 15 more to go.
muzzies get extra credits during this time so when they go for your neck, muzzie only being friendly. this actual advice is not mine though
and now the muzzielove virus with corona. corona is a (((supremetard))) beer. pay close attention, there’s a cross in the logo. so why muzzies destroy it? we need to go back to whitey supertard scientfic supremacist “thunderf00t” who should be amputated for muzzie lovin and spreading scientific supremacism. when this whitey supertard imposed self quarantine i said it smellz. that was many moons ago and i was first as usual to smell BS 20000 light years away.
then we have whitey supertard “royal” instituiotn who ran model predicting muzzielove virus. then admited it wrong and went to boink married gf and lost job.
ask yourslef if someone speak exclusively high british english, chances are they love muzzies? of course they love muzies and that’s why i’m pushing low english. it’s more trustworthy. muzzies benefits in all this.
churches closed but muzzie mosque open. and all the rapes in UK was “by all ethics” no mention of muzzies which brexit about to amputate.
supertard big muzzie beard SAWS pbuh swt reported muzzies in ger comprise of 40% of jizya payment to the tune of 4 billion euros per month. with that money they could go REAL GREEN or FAKE GREEN, it doesn’t matter that would’d been prosperious without the rapey rapey and stabby muzzies. The scale of jizya is incredible. it’s all out in the open if you just listen to the UK muzzie andy choudary.
muzzie sabotage airliner and got loved 1000x in the form of reporting of “union dispute”. supertard big muzzie beard SAWS pbuh swtreported it’s actually jihad.
Then in astralia muzzie with big grin and smug looking face with a hat and meat grinder practically begged to be amputated and put on muzzie hamster wheel. cops love him 100000x more and are puzzled why he did this. i’m scratching my head too which has thinning hair
Muzzie in NZ allah acbar and went after cop with axe. Cops loved muzzie 10000x love conquer all. No tweet AOC SAWS pbuh swt , not siri Lanka, not when muzzie shot 6 cops on philadelphia. 25 billion tweet on Christchurch though
then there we deceptions of deep green, real green, deep deep green, fake fake green, and all the permutations of green. when AOC SAWS pbuh swt – (ZOMG i’m amazed at the technology in a sink food grinder) failed, the greta SAWS pbuh swt deception kicked in. I belived everything even the fantastic flying goat story.
for many years, centuries, million, quadrillion of years since (((supremetard))) SAWS pbuh swt created heaven and earth and before supertards SAWS pbuh swt big muzzie beard and glenn roberts put up web sites, i warned tards and supertards about muzzies.
i made no progress sort of like banging head against concrete, concrete wins everytime
but then i “reverted” to a supremacist muzzie jerk and I’m the best of humanity allah has created. i wear a muzzie dress and i pee sitting down holding up the bathroom line. this made supertard SAWS pbuh swt have bladder infection but the love for muzzies only intensified.
and now i have superpower, big goat SAWS pbuh swt is feeling intense heat. all stops are pulled it seems – even Robert Inget the controlled libtard opposition is deployed to censor me. but uppertard SAWS pbuh swt is not going to destroy free speech for someones love of muzzie. supertard SIS SAWS pbuh swt dropped the appeal and that’s final. it’s now as good as case law. supertard SIS SAWS pbuh is back being occupied with his bunker and learjet and auto keltecs and he said absolutely do not bother him. so it’s set in stone that uppertard SAWS swt pbuh is not going to modify this forum