Friday, October 10, 2008, 8:27 AM
In a few comments, readers have specifically asked, "What do you mean by a banking holiday?"
This is a fair question and I can answer it easily. A banking holiday will consist of a period of time where your bank's doors are closed and you will have limited access, if any, to your funds.
"What are the possible impacts of a banking holiday?" Now this is a harder question to answer. In reviewing the Argentinian experience, the most direct impact is that a large portion of trade will shut down, leading to a rapid depletion of consumer goods from store shelves.
Trade will still happen, but at the glacial pace imposed by a direct cash/barter economy. In Argentina, there were stories of farmers buying cars from dealers using soybeans. Presumably the dealers then traded the soybeans off for something else they wanted.
If a banking holiday ensues, things will be very confusing for a while.
a snippet from the September 19 Martenson Report where I try to illustrate the progression of a banking holiday using a scenario format. » Read more