WHAT’s A CASH SHORTAGE?

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What happens if a shitty 3rd world country enters a cash shortage and no one can take out cash from the banks and ATM’s.

What does a cash shortage mean for an economy on life support?

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3 Answers

Anonymous 0 Comments

It’s pretty devastating actually. If you want an example of a country that had to deal with a crippling cash shortage you can ask the Confederate States of America.

In a sense, it’s not important *how much* money a country has, it’s more important the “velocity” of the money. What I mean by this, imagine I’m a farmer and I get paid a single $5 bill. I immediately buy something at a store for $5. The store takes it and hands it to a suppler to get one more of the thing I bought, the supplier gives it to a manufacturer to restock themselves, the manufacturer gives it to a farmer (me!) who grows the thing they need to make the thing. I take my $5, go to the store, and buy a thing. That $5 is “moving” with a “speed” through the economy. It’s a basic POV, you understand that the “health” of this economy isn’t the SIZE of the $5, it’s the speed with which it moves through all those people. The faster the money moves, the more people are buying/selling, earning wages, paying bills etc.

So a really important limiting factor in the health of an economy isn’t the SIZE of the money, it’s how quickly it moves. Obviously this is an very simply view of economics, but you can also see that if this process is held up because no has a $5 to give to the next, nothing happens. The whole process crashes to a halt… not because there is no demand or no workforce, or anything, just because no one has actual, physical money.

There are tons of lessons to be learned in history from this, this lesson is part of why the US rebelled against England, why Australia *didn’t*, why China almost collapsed in the 1700s, and a big part of why the Confederate States of America collapsed. Not because of a lack of an economy, or industry, or demand, but from a physical lack of actual currency.

Anonymous 0 Comments

No cash? No money.

Say you went to the bank, you wanted to withdraw money and they were like no. Now theres also no electronic transactions, so do you have money?

What happens when no one has money? Would you keep going to work if your boss didn’t pay you? Would you sell stuff to people if they didn’t have money?

Everything stops. That’s bad.

Anonymous 0 Comments

I’ll leave it up to the Lebanese to decide whether their country qualifies as a “shitty 3rd world country”, but anyways, when a country enters a cash shortage, at some point people will [start robbing banks](https://www.bbc.com/news/world-middle-east-62514631) merely to get at their own money:

>An armed man who held a bank hostage for more than six hours in Beirut because he could not withdraw savings has been hailed a hero by the public.
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>…
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>His actions captured public support – with cheering crowds gathering outside and chanting: “You are a hero.”
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>The stand-off eventually ended peacefully with no injuries, after negotiators struck an agreement allowing the suspect to receive $35,000 (£29,000) of his savings upfront, LBC TV channel reported.

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>[…] his wife and brother, who were outside the bank, said that “everybody should do the same” to get access to what is “rightfully theirs”.