I have read a lot about bank holidays, limits on withdrawals and the like in Argentina. And I know that the financial collapse in Argentina happened over a decade ago when perhaps debit cards and online banking were not as prevalent. Having said that, can you tell me what method you and others used to pay for your rent/mortgage and utilities? There has been a lot written on paying for food and other physical purchases at the market, but not so much about basic housing expenses.
Our paychecks arrive in our accounts via direct deposit and we pay our mortgage and utilities using online banking. Very little of our money actually touches our hands. We rarely even visit our bank unless we need cash or have a check to deposit. In fact we hardly use cash at all but favor making purchases with our debit cards.
Please help me to wrap my mind around how financial conditions will most likely change in this regard. Will we not be able to pay or mortgage using online banking? Do you think there will be limits or problems with that? What about paying for utilities such as power, water and heating gas? Are financial limits limited to just cash withdrawals? Will online banking continue to function as it does now?
Thank you for your insight
Hi Stephen, even though the Argentine collapse took place a decade ago credit cards and online payments where much in use. Most people had credit cards as they do now and well, used them a lot too!
The problem is that they stopped being accepted as things went down. With bank accounts frozen the economy falling apart within minutes you saw “Cash only” signs going up everywhere. Even now you can see those signs in many stores, especially gas stations.
How did you get by? Using cash. You looked for it, tried to find a more secluded ATM that wasn’t out of money or waited in line early in the morning to get you money allowance, what little they allowed you to get of your own money per day.
This is why “cash is king” is especially true sometimes during the first stages of a collapse when credit cards are no longer accepted by many stores. If people are hungry for cash you can even land a few good deals taking advantage of the scarcity of cash. I landed a pretty good deal on a queen size bed because I had the cash for it at a time when most people didn’t. (I was getting married and needed to buy it anyway).
Helping you wrap your mind around this, a possible scenario would be:
*Accounts are frozen. You are no longer allowed to move your money around, especially not out of the country.
*You are allowed to make on line payments for mortgages and other bills, but theres a limit to how much cash you can get out.
*Some companies may not accept online payments and there may be problem on a per case basis. Maybe a guy can pay his power bill online or with his debit card, but another power company may demand cash only.
*You may still use your cards on certain brick and mortar stores too, but many stores may prefer to go for a cash only policy. In this scenario you’ll see clear discounts for paying in cash, money that can be kept out of the frozen banking system.
*Check in general may not be accepted due to a general fear of bouncing checks. Most banks will probably freeze those too.
*The basic idea here is, find a way of stopping the bank run, keep the money in the system and stop the flight, especially out of the country. Under these circumstances, inflation will increase significantly as the economy becomes weakened and the trust in the value of money decreases.
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