Safe place to put money in an economic depression
July 6, 2011 10:24 PM   Subscribe

If the American and world economy truly implodes, where is the safest place to have one's money and why?
posted by mintchip to Work & Money (19 answers total) 8 users marked this as a favorite
Sorry - what do you mean by 'implodes'? A global depression? By 'safest' do you mean 'most liquid / accessible' or 'most likely to retain its value'?
posted by obiwanwasabi at 10:39 PM on July 6, 2011

open ended question, but I say "it depends". Specifically, why does the economy implode? If its something like Germany rolling tanks to take its money from the Greeks, then probably US dollars, cash. If its something like the Bernank' saying he is going to just print money to pay off the US debt, then probably gold, or something that will maintain value with inflation.

And if the shit really hits the fan, its the whole guns and ammo scenario, no?
posted by H. Roark at 10:41 PM on July 6, 2011 [1 favorite]

Food, clothes, arms and ammunition, fuel, transportation... essentially the survivalist's wish list. But, if the world is only slightly imploded; it's best to store value in things other than money, since money is usually the first thing get manipulated. What things you should invest in is, of course, hard to guess. Besides the obvious survival, it's hard to predict what "people" wants in general. Is gold what people want? or cigarettes and liquor? Maybe people want iPods, despite the calamities. Your guess is as good as mine.
posted by curiousZ at 10:42 PM on July 6, 2011

By 'implodes' I mean a global depression, and by 'safest' I mean 'most likely to retain its value.'
posted by mintchip at 10:42 PM on July 6, 2011

Buy a coal mine.
posted by Horselover Phattie at 10:50 PM on July 6, 2011 [1 favorite]

Say you have two choices...

a) US$1600 in cash, e.g., 16 US$100 notes.

b) a 1-oz gold bar

You set both on fire.

Between (a) and (b), which one preserved its value?
posted by jchaw at 10:53 PM on July 6, 2011 [2 favorites]

> Between (a) and (b), which one preserved its value?

Are you cold, or is there a metal-based barter economy nearby?
posted by b1tr0t at 11:29 PM on July 6, 2011 [18 favorites]

by 'safest' I mean 'most likely to retain its value.'

Barring some kind of major social restructuring, for the long-term, I would say "land".

Though maybe not coastal land.
posted by mstokes650 at 11:30 PM on July 6, 2011 [3 favorites]

Maybe it's because I've been reading Marx, but I think it's important that you distinguish between use and exchange value and which predicted scenarios favor each.

If you're fairly confident something like our present capitalist economy will still be in place and that your private property specifically will be protected (by the state? by you?), a cache of some durable and easily traded commodity (gold, drugs) is the way to go.

If you fear it won't, or you wouldn't be comfortable fleecing those who didn't have your foresight, collect things you know will be immediately useful to you. There is likely a great deal of overlap with the former category, but this rules out certain things (gold).
posted by elektrotechnicus at 12:28 AM on July 7, 2011

If the 'global economy' implodes it is not Armageddon or the end of the world, on a planetary scale. Outside the first billion or so of the planet's population, a significant majority live across the 'developing world' primarily in cash based hyper local economies without much exposure to this 'global economy' which tends to be more dependent on consumer credit and other financial tools and post paid on regular billing cycles.

This is why India's economy was influenced by the 'global downturn' but not like the OECD countries and why so many economies in Sub Saharan Africa have been chugging along under the radar.

Observe the spending and investing habits of those living on the edge of adversity and scarcity - they will give you a clue about things that will carry on enduring as sustainable businesses - food, cooked meals on the cheap, convertible valuables like jewellery or electronics and the underlying assumption of uncertainty of cash flow.

Don't buy items for the longer to wait for results scenario like survivalist tools - that independent rugged taking to the hills will be a scattered response across the globe not a majority one. Check Orlov.

Precious stones, small gold jewellery but nothing less than 18 carat, higher preferred, smaller biscuits of pure gold. I don't know if any major currency like the pound, dollar or euro would survive a 'global economic downturn', what are the back ups? The yuan and the rupee? Not the yen. I would open a rupee bank account somewhere out the way but that's just me. I wouldn't make it my primary source of barterable items used in cashless transactions.

Rural rest of the world is over 60% of the population and their existing lifestyles are already least dependent on the formal or cash based economy. They are proud of how little cash money they require for transactions, and many sophisticate barter mechanisms exist. Yes, in Malawi an iPhone can cost upto 10 goats depending on the model but a basic Nokia with camera could go for just four, if one were a pregnant female.

Assessing value in an exchange or transaction will mean 'bargaining' or 'haggling' to reach a mutual point of agreement along the continuum of offer and counter offer. Communication technology can be kept up, pay as you go models have already conveyed the understanding that it costs to put up technological infrastructure in adverse conditions, with a variety of homegrown and village finance models, renewable energy sources will keep the cellular towers alive across the fuel starved regions of Africa and South Asia.

I'm betting on ingenuity, innovation and creativity to carry enough intrinsic value for barter in this post economy globe.
posted by infini at 12:34 AM on July 7, 2011 [3 favorites]

Real property (real estate / land)

No matter what happens, land can't be destroyed or lost. There is a strict limited supply, with no hope of finding any more. It is also the one thing that everyone, always, no matter what needs.

If the world economy collapses, gold may still have intrinsic value - but the demand for it will be low, since people are trying to survive. Land is a survival commodity.

Of course, the one flaw to land ownership is legal rights. If the world implodes to the point of revolution and chaos, then you may not be able to protect your legal rights to your land.

However, if the legal / political structure of the world stays intact - then land is the investment. (and right now is a particularly good time to buy land, maybe the best prices on land in your lifetime).
posted by Flood at 4:16 AM on July 7, 2011

posted by j03 at 4:48 AM on July 7, 2011 [3 favorites]

A small cache of various liqours will retain a great value no matter the economy, wines may go away in time; but whiskeys, scotch, gin, vodka, etc will keep and appreciate.
posted by buzzman at 4:52 AM on July 7, 2011

You may be interested in the Permanent Portfolio, an asset allocation described by the late Harry Browne. It is a simple allocation of 25% indexed stocks, 25% long term treasuries, 25% gold, and 25% cash (short term treasuries, ibonds, etc.). The rationale is that the future is unknowable and each portion will protect you in a certain economic environment - whether that be growth, deflation, inflation, or tight-money recession. You can read more about it here or at this forum. There is even a managed fund (symbol: PRPFX) that somewhat replicates the concept.
posted by Durin's Bane at 5:01 AM on July 7, 2011 [2 favorites]

Unless the economies explode in a fury of inflation, I would think that a cache of cash and coins would be the best opportunity. Just because a government quits working doesn't mean the people will quit using the currency they are used to.

If you are talking survivalist, then land with a good water source is best.
posted by gjc at 6:34 AM on July 7, 2011

In case of either a global economic or asteroid-induced implosion, I would (and have) put my 2 cents into land with qualifications:

1. Away from cities (and likely unrest)
2. With tillable soil (for grain)
3. Close to commodities likely to be in high demand & short supply when SHTF (salt deposits, sugarcane, etc.)
4. With a reliable source for potable water
5. In a region that tends to support private property rights

Gold is fantastic, but it won't fill one's grumbling belly. Plant now (standard fruit tree root stocks can take a decade to begin producing) and if nothing catastrophic happens, you'll feel a little silly but still have a full cupboard.
posted by muirne81 at 12:07 PM on July 7, 2011

Don't use the word money, try assets. If the economy implodes then money will have no worth. Real estate could have value but I wouldn't want all of my assets in real estate. You will want a diversified portfolio of gold, luxury items like diamonds, art, etc. You can probably adapt your assets to the local economy. This is thinking that the problem will be short term.

If you are thinking long term then adapt to a survivalist mode of a farm away from civilization, easily defensible and with all of the basic necessities of water, tillable soil, timber, and other resources.
posted by JJ86 at 2:20 PM on July 7, 2011

If shit gets shittier, then gold, commodities, and the Swiss Franc

If lots of shit starts going down, the US Dollar

And if shit hits the fan, well, you should have stocked up on all that survivalist shit
posted by blargerz at 2:32 PM on July 7, 2011

(and right now is a particularly good time to buy land, maybe the best prices on land in your lifetime).

Hasn't this statement always been true?
posted by schmod at 5:49 PM on July 7, 2011

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