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Banking and Finance

Banking and Finance (View larger version)

By: Patrick J. Kiger

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According to an article on the Federal Reserve Bank of Cleveland website by research analyst Nelson Oliver and economist Dan Littman, nearly 97 percent of the funds that pass from one person or company to another in the U.S. are transmitted electronically. But people still use cash for small everyday purchases, and about 49 percent of all transactions are in cash. There’s about $1 trillion in paper money and coins in circulation in the U.S., and you’d think that it would be enough to enable us to switch at least temporarily to an old-fashioned cash-only economy in the event of a power blackout.


But guess again. As a November 2012 Consumer Reports article notes, the widespread electrical blackouts caused by Hurricane Sandy not only left many of people without lights, but also without money as well. Many automated teller machines were knocked offline by the outage, and those that remained in operation often attracted long lines and ran out of cash. 


It’s no wonder, then, that during winter storm Nemo in early 2013, Bank of America actually tweeted to consumers to “make sure you have plenty of cash on hand” and advised them to make a trip to the nearest ATM for cash before the storm hit.


To compound the damage, Consumer Reports, credit and debit cards, other staples of our electronic-dependent culture, weren't of much use to people during Hurricane Sandy, since the terminals that stores use to process those transactions often weren't working. While some stores may have generators or battery-powered backups for their registers, in a prolonged outage, fuel supplies and batteries eventually will run out. 

 
Such an outage undoubtedly would also do major damage to the U.S. economy. According to a U. S. Department of Energy report, shorter-term power outages cost us as much as $209 billion annually, including lost wages and retail sales.

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