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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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.
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