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Do You Have a Survival Plan?

Do you know how to survive a disaster?

What are your chances of surviving a disaster such as nuclear fallout, financial crisis, floods,
extreme heat or even earthquakes and war? Unless you are prepared, pretty slim. Here are
some vital tips and suggestions to help you improve your chances of survival


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Financial Meltdown

Probably more likely than a nuclear all-out attack is a Global Financial Melt Down (GFMD). We have already had a taste of this in 2007-2008 when the Global Financial Crisis hit the world.

The banks have demonstrated that they are not above removing or 'using' depositor's funds to offset or handle a financial crisis within their ranks. This was demonstrated with the Bank of Cyprus 'converting' depositor's funds into equity for the bank.

In order to understand how banks work it is important to understand the legal framework under which they operate. There is a good rendition of this in Wikipedia and it is reproduced here:

"The banking terms "deposit" and "withdrawal" mean a customer paying money into, and taking money out of, the account. From a legal and financial accounting standpoint, the term "deposit" is used by the banking industry in financial statements to describe the liability owed by the bank to its depositor, and not the funds that the bank holds as a result of the deposit, which are shown as assets of the bank."

"For example, a depositor opening a checking account at a bank in the United States with $100 in cash surrenders legal title to the $100 in cash, which becomes an asset of the bank. On the bank's books, the bank debits its currency and coin on hand account for the $100 in cash, and credits a liability account (called a demand deposit account, checking account, etc.) for an equal amount. (See double-entry bookkeeping system.)"

"In the audited financial statements of the bank, the $100 in currency would be shown on the balance sheet as an asset of the bank on the left side, and the deposit account would be shown as a liability owed by the bank to it's customer, on the right side of the balance sheet. The bank's financial statement reflects the economic substance of the transaction, which is that the bank has borrowed $100 from its depositor and has contractually obliged itself to repay the customer according to the terms of the agreement. To offset this deposit liability, the bank now owns the funds deposited (either in notes and coin or more usually as a debt owed by another bank) and the bank shows those funds as an asset of the bank. These "physical" reserve funds may be held as deposits at the relevant central bank and will receive the interest as per monetary policy."

Typically, an account provider will not hold the entire sum in reserve, but will loan most of the money out to other clients, in a process known as fractional-reserve banking. This allows providers to earn interest on the asset and hence to pay out interest on deposits.

By transferring the ownership of deposits from one party to another, banks can avoid using physical cash as a method of payment. Commercial bank deposits account for most of the money supply in use today. For example, if a bank in the United States makes a loan to a customer by depositing the loan proceeds in that customer's checking account, the bank "typically records this event by debiting an asset account on the bank's books (called loans receivable or some similar name) and credits the deposit liability or checking account of the customer on the bank's books. From an economic standpoint, the bank has essentially created economic money (although not legal tender). The customer's checking account balance has no dollar bills in it, as a demand deposit account is simply a liability owed by the bank to its customer. In this way, commercial banks are allowed to increase the money supply (without printing currency, or legal tender).

So, basically this gives the bank licence to do what they wish with the funds you deposit and, if they have funds, to pay you on demand the funds you wish to withdraw. When a financial crisis occurs, it means the bank either cannot or does not wish to honour a demand by a depositor for some reason. So if one has all ones assets in a bank account one can be in trouble.

If one has property, this may be a bit safer depending on the crisis. If the property market tumbles, as it did at the beginning of the GFC with mortgages not able to be paid, then the value of property you have may fall drastically with consequent loss of value in your assets.

Some people invest in stocks and shares but as these, too, would be affected by a GFMD then their value can also tumble and one's assets be reduced thereby. It is no fun buying some shares at 40 dollars each then their value plummeting to 10 or 5 dollars each.

Some people suggest a balance of these three forms of storing your money but if all fail, as in a Global Meltdown, what price balance?

So where can one put assets that are not going to be affected by any potential financial meltdown occurs?

One area that is relatively safe is by putting some assets into precious metals, gold and silver mainly, although one can use platinum and palladium also. Gold and silver can be traded and used to buy goods and supplies and they do retain their value regardless of the dollar value placed upon them. For example. One ounce of gold will still buy or can be exchanged for a good quality men's suit now as it did 50 years ago. The amount of dollars needed to purchase that suit has changed of course but an ounce of gold remains an ounce of gold. That has not changed.

And one does not have to buy large bars of gold or silver. It is possible these days to buy small one gram bars of gold and silver coins which are ideal for purchasing everyday items. One ounce silver coins are, at the time of writing, around 20 dollars each, so small enough to buy food and other needed supplies. Many places now will accept these instead of dollars. If the time comes when you need a bucket to take your dollars to the supermarket to buy bread (and it has happened before) a silver coin beats a bucket full of dollars any day of the week.

In the US, as in many countries now, money is printed with no value backing it. Itis called quantitive easing but basicvaly means printing money that has no value other that what one agrees to. And the more that is printed the less value it has and the more is needed to purchase goods and services. Money has become simply an idea back by confidence. Remove the confidence and the true value of all that paper becomes apparent. With a gram of gold (around 42 dollars at the time of writing) and silver around half that for an ounce, these do not lose their value and there is hardly anyone that would not accept a gram of gold or a silver coin for groceries or some goods or service. Particularly in Asia where gold and silver are considered real money. India and China are the largest users of gold and silver and China is currently buying up as much gold as possible, equal to the worlds production last reported. In Vietnam you can buy a house for bars of gold.

So to prepare for a potential financial meltdown of banks and the financial system, it seems sensible to have some assets stored in gold and silver for any future need.



What is the best Survival Kit you can have? This depends on what disaster you need to survival, A Tsunami, Volcano, Nuclear attack, Flood.
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Aussie Storm Shop
Disaster Aid International
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HomeFront Emergency
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Survival Supplies Australia
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