What happens to your money

**jas** · 04-12-2011, 10:03 PM

What happens to your money in the bank if the dollar goes belly up?
Do they take? Does it just become worthless?

Is it better in a coffee can buried in your yard?

How is a new currancy instituted?

TIA

**jas** · 04-12-2011, 10:29 PM

What happens to your mortgage? Is it still due in dollars?

**Nishu** · 04-13-2011, 12:41 AM

I think you're talking about the devaluation of the dollar, in which case we'll still use them but it will be harder to buy with them. The terms of your agreements on loans wouldn't change, so prices would skyrocket and you'd basically be paying a tiny amount for the things you've already purchased. (Example, the value of a dollar drops by 50%, and your 200K house is now worth 400K but you're locked in to a 200K mortgage so the bank just got screwed. This is why they say inflation benefits the borrow more than the lender.) On the other hand, obviously, all your investments would be suddenly worth half as much. (I suppose property would be exempt from this.)

I suppose it would be possible just to completely abandon the dollar, but man, things would have to be really, really, really bad in order for that to happen. It happened in Germany in the early '20's. You can find pictures of people burning their currency because it was worth so little. I'm not sure how they managed to deal with that, but if you wanted to look up the answer to your own question, I'd start there.

**Nishu** · 04-13-2011, 12:56 AM

Also, burying cash in a coffee can would be the absolute WORST thing you could do. Worst. No doubt.

I don't know a lot about investing, but if I had to guess, I'd say the safest thing to do would be to invest in things that have real value. Not stocks, and not cash. Real estate and gold would probably be safer, if I were to guess.

This is only in the event of an economic collapse, though. Investing in things like stocks when the economy is rough could pay off big if it rebounds rather than collapses.

Anyway I'm sure there are people here who know more about. I'm making a lot of guesses.

**jas** · 04-13-2011, 01:01 AM

There is a lot of chatter about gold of course, but silver seems to be what a lot of people are looking at because it is so undervalued.

I have been reading a lot of stuff about it.

I just didn't know what happened to the dollars we have in the bank.

that is a good place to start reading about what happened to Germany and other places when their money failed.

**daylily** · 04-13-2011, 08:01 AM

I've wondered the very same thing, jas. I still don't really understand! I don't understand what happens to debts we owe.

Example: we just have propane fill-up. It's $700. The dollar fails before I get that paid off. Do I still have to pay the value of $700 with my dollars that are not worth as much? Would it be easier or harder to pay the $700 with my 7 one hundred dollar bills?

I've read upteen articles that are explaining this but I have never understood them. They still speak in financialease and I wish they would speak in words I can relate to! I am a smart woman but not in financial things

**jas** · 04-13-2011, 08:04 AM

Yep, need someone to explain it so I can understand what will happen.

I keep reading to and still have questions for sure.

**Greebo** · 04-13-2011, 08:13 AM

If the dollar completely collapses as a currency, we'll have far more worse problems to worry about than what your bank accounts look like.

If the dollar simply loses value, however, well - debts in dollars are still debts in dollars.

**imagine** · 04-13-2011, 09:00 AM

I guess I don't understand the question

Do you mean if the dollar becomes devalued?

Do you mean if we switch currencies like Europe did from different currencies to Euros?

Do you mean the dollar has less buying power because of inflation?

Do you mean the dollar just becomes worthless?

The answer would be different for each question

**jas** · 04-13-2011, 09:08 AM

Originally Posted by imagine

I guess I don't understand the question

Do you mean if the dollar becomes devalued?

Do you mean if we switch currencies like Europe did from different currencies to Euros?

Do you mean the dollar is has less buying power because of inflation?

Do you mean the dollar just becomes worthless?

The answer would be different for each question

Yes, I guess I want the answers to all those.

How does an economy start over, I guess that is what I want to know the most.

And of course if all this comes to pass I am not going to be stressing over my credit card bills. I am taking steps on other fronts to protect my assets. I was wondering what happens to what is in the banks at the time of a crash, that all. I get that it would be worth a whole lot less if anything.

I mean as long as this system is still humming or well choking along we need to have at least some money in the bank to pay bills, ect. That is the money I was interested in.

**monkeywrangler71** · 04-13-2011, 09:27 AM

What difference does it make where your money is if your economy collapses? Whether it's a piece of paper buried in your yard, or a piece of paper saying that some collapsed bank owes you a pieces of paper - if it's worthless, it's worthless.

**Greebo** · 04-13-2011, 09:31 AM

Remember this too - an economy is not based on money, it's based on TRADE. If the dollar collapses, the economy will *change*, but it won't vanish. As long as there is a sense of law and order, trade can occur with or without currency.

**daylily** · 04-13-2011, 09:34 AM

See, nobody is really answering! Greebo tells us we will have worse problems to worry about. Doesn't answer the question.

He says..."If the dollar simply loses value, however, well - debts in dollars are still debts in dollars." Exactly what does that mean? Does it mean I can still pay my hypothetical $700 propane bill with my seven $100 bills, even though they are worth less or even worthless?

**imagine** · 04-13-2011, 09:44 AM

Originally Posted by jas

Yes, I guess I want the answers to all those.

How does an economy start over, I guess that is what I want to know the most.

And of course if all this comes to pass I am not going to be stressing over my credit card bills. I am taking steps on other fronts to protect my assets. I was wondering what happens to what is in the banks at the time of a crash, that all. I get that it would be worth a whole lot less if anything.

I mean as long as this system is still humming or well choking along we need to have at least some money in the bank to pay bills, ect. That is the money I was interested in.

Do you mean if the dollar becomes devalued?

Devalued means that the dollar is worth less compared to another's countries currency. For the general person this doesn't mean much. it mainly affects you if you are traveling to that country and exchanging your currency for theirs. It also affect countries dealing with debt to another country and exports and imports. It might affect who a country buys stuff from. The value changes constantly up and down. You can hear about it on the stock and commodity reports.

Do you mean if we switch currencies like Europe did from different currencies to Euros? If we switched to a different currency like Europe did I think it would go similar to how they did it. You start getting your pay in the new Currency and both currencies can be used. You turn in and exchange the money to have in cash for the new currency and by a given time table only the new currency will be excepted. really wouldn't affect much Your bills would just look different. Your income and prices might look different to but it should still all be equal.

Do you mean the dollar has less buying power because of inflation? Inflation means that the dollar earned doesn't purchase as much at the store. I think we all know how that works.

Do you mean the dollar just becomes worthless?
Since the dollar is just a method of barter and it became worthless you would barter in something worthwhile to people, I'm thinking water, clothing, skills, tp.

Banking
If the banking system crashed. and the government did not the the FDIC would insure your money up to X dollars. The FDIC is the insurance policy against failure like the bank collapse in the depression. If bank fails and another can buy it up all goes on as normal just a change of owners and sign change. If a bank fails and there is no other bank to buy it then the FDIC insurance would kick in a your money would be insured. Also there are several things that would have to happen before a bank collapse. The government did a bail out of the banks this was to keep the banking system from collapsing. ( although many did not like that some banks got bailed out it did keep the system from collapsing)

**Greebo** · 04-13-2011, 09:55 AM

Originally Posted by daylily

See, nobody is really answering! Greebo tells us we will have worse problems to worry about. Doesn't answer the question.

You should re-read my answer.

He says..."If the dollar simply loses value, however, well - debts in dollars are still debts in dollars." Exactly what does that mean? Does it mean I can still pay my hypothetical $700 propane bill with my seven $100 bills, even though they are worth less or even worthless?

It means if the dollar is still in use, and you owe dollars, then you still use the dollar.

The question itself is largely meaningless without a more clearly defined context. You may as well ask "If the Government collapses, will there still be taxes?" The answers you'll get to that will be just as useful.