Friday, May 4, 2012

Report: More Americans Stashing Cash in Home Safes

Smart Money writes:
In an era marked by financial turbulence, it's probably not surprising that safes have become a popular commodity, with some manufacturers, retailers and installers reporting sales increases of as much as 40 percent from a few years ago. But the bigger eyebrow-raiser is what has happened to those iconic gray-steel boxes of yore: They've undergone an extreme makeover -- or several of them. Taking the place of those old square combination jobs are a range of custom safes, from boutique showpieces to decoy models for the family den -- not to mention the truly offbeat (a hideaway lockbox resembling, ahem, a pair of men's underwear) and the seriously safe (an in-home vault with a price tag of more than $100,000). And that's not even getting into the ever-broadening array of color choices (champagne marble, anyone?) "None of our safes should be hidden in a closet," says Markus Dottling, principal at Dottling, a German specialty-safe manufacturer whose museum-worthy designs can cost more than the average American house.
Why are home safes important?

Many years ago, there was a bank that failed in NYC's Chinatown. The next morning, the papers showed lines of people, some with lounge chairs waiting in line to pull out their money. (Something similar occurred more recently during the housing bubble)

Depositors waiting to pull their money out of IndyMac during the housing crisis.
One thing I couldn't understand at the time of the Chinese bank failure was why the lines took so long to move. If people are bringing lounge chairs, it's a long wait. So when the Chinese bank failed, I contacted the manager to find out why. She was a talkative one and explained to me that the FDIC came in and said there wasn't enough physical cash on hand and that more needed to be shipped to the bank, so the bank needed to slowdown withdrawals .

She then said that the FDIC instructed her and her employees to go very slow when working with customers. That they should follow every regulation included in depositor documents and make sure all the documents required to withdraw money were filled out and filled out completely and correctly, before paying any money out. Thus, the lines.

I have no idea if there actually was a shortage of cash, or what the real reason was behind the FDIC instructing bank employees to go slowly, however, if the FDIC is going to pull this off with a small bank in Chinatown, can you imagine the nightmares trying to pull your money out if there ever is a more serious run?

Yes, a good home safe where you can store cash, gold coins, silver coins is not a bad idea.


  1. This is just ridiculous. Are you seriously suggesting that the FDIC would NOT guarantee all deposits? Also, isn't hyperinflation around the corner? Then why are people so stupid and store cash?

    Note also that the high-end manufacturer of safes is a medium-sized (Mittelstand) German company. How is that possible under the Austrian economic model? Shouldn't Germany, that socialist hell-hole of high taxes, generous welfare programs and government spending have succumbed to less burdened competitors by now? How do you explain the success of this? Germany doesn't follow a gold standard...

    1. the mass inflation around the corner you're worried about would not actually make the printing presses go any faster. having cash is a hedge against bank runs and bank holidays, both of which are reasonable to expect during a government financial crisis.

      there is not now enough paper to back the electronic deposits in the system. if everybody attempted to withdraw simultaneously, people already holding cash win, regardless of what they do to the deposit system after the fact.

      the problem you have is that you believe the two are one and the same. they are not. if the debit and credit systems were turned off, the pieces of paper would continue to circulate. how much do you have at the ready?

    2. Please stop commenting on a subject you obviously are ignorant of. Thank you.

    3. @Anon 07:12: Nothing here probably comes close to being as ridiculous as your post. At least argue with facts and logical arguments. Maybe you were so mad that you couldn't think straight. That happens.

      Anyhow, the "Austrian" school of economics has nothing to do with the country or government of Austria. When we hear this association being made, we know we are talking with someone very uninformed in Economics. Hence Mikes comment. Also, your fallacious argument is what would be called a straw man argument. You may want to brush on your logic as well.

    4. @Anon 7:12- Thanks for the laugh.

    5. I remain by my points from earlier (07:12). Why didn't Germany collapse on the "Road to Serfdom" by now? As Bob Solow recently wrote: "I remember thinking that, if Hayek were right, I should live to see Norway and the Netherlands at least halfway to tyranny. It seemed implausible then and it seems embarrassing today." That certainly also applies to Germany.

      We have also not seen hyperinflation which has been predicted for decades by "Austrian" economists (Including repeatedly by Ron Paul) since the 1980s. Rather, the record of keeping inflation low and stable has been "impeccable" to borrow the ECB terminology, the Federal Reserve and the ECB do not promise inflation of 0, remember.

      All of these facts, and yes they are facts, are embarrassing failures of the Austrian school. That's the logical argument, and the facts. Where did I ever mention Austria, by the way? Or do you not know that Germany and Austria are, in fact, different countries? See what I did there...

  2. It isn't going to be enough to simply pull worthless pieces of paper out of your bank and store them in a vault. Paper currency that obligates the issuing government to do nothing (FIAT) can be stolen by decree. Your money has to be converted into something that cannot be stolen by decree but remains liquid and can be easily transported. Precious metals are the best for that.

  3. Any guesses as to the median age of the people in the picture who are waiting in front of IndyMac? I say it's 74 years.