Hurricane Maria Has Transformed Puerto Rico Into A "Cash Only" Economy

Tyler Durden's picture

Electricity, internet access and cell phone service have been offline in parts of Puerto Rico for a whole week. And with the island still struggling to rescue people stranded in remote villages, those managing the emergency recovery effort have yet to focus their attentions on the monumental task that looms ahead: Rebuilding the island’s devastated infrastructure, from communications to sewers and water treatment plants that have been damaged by flash flooding and 155 mph winds that Hurricane Maria visited upon the island.

The damage, as Bloomberg reports, has essentially knocked Puerto Rico’s economy back into the 1950s. For locals who’re struggling to begin the process of rebuilding their damaged homes, shops across the island are only accepting cash.

The cash economy has reigned in Puerto Rico since Hurricane Maria decimated much of the U.S. commonwealth last week, leveling the power grid and wireless towers and transporting the island to a time before plastic existed. The state of affairs could carry on for weeks or longer in some remote parts of the commonwealth, and that means it could be impossible to trace revenue and enforce tax rules.

 

The situation further frustrates one of the many challenges already facing a government that has sought a form of bankruptcy protection after its debts swelled past $70 billion: boosting revenue by collecting money that slips through the cracks.

The cash-only economy could create problems for the island’s cash-strapped government, as business owners will no doubt be tempted to avoid declaring some of their revenues, depriving PR’s government of badly needed revenue.

 In fact, the power blackout only exacerbates a situation that has always been, to a degree, a fact of life in Puerto Rico. Outside the island’s tourist hubs, many small businesses simply never took credit cards, with some openly expressing contempt for tax collectors and others claiming it was just a question of not wanting to deal with the technology.

 

But those were generally vendors of bootleg DVDs, fruit stands, barbers - not major supermarkets. Now, the better part of the economy is in the same boat.

And after a week without power, the few ATMs on the island that still work have run dry, while most others are simply out of service.

As Bloomberg reports, many Puerto Ricans were still living off what money they thought to withdraw ahead of the storm. When a branch of Banco Popular in San Juan opened on Monday morning, the line stretched about 200 people deep for banking and ATM services. People fanned themselves with whatever they could find and held umbrellas against the sun. At the back stood Giddel Galliza, 64, a music teacher.

“I didn’t want to come because of the lines,” he said. “I need money for basic needs, food, gas - my tank is full but it won’t be forever. I normally pay with my card.”

 

A similar situation unfolded at a Banco Santander across the street. Erasmo Santiago, a 63-year-old mailman, said he was actually a Popular client but opted to pay a fee and go for the slightly shorter line. “I have my mom living with me, she’s 83,” he said. “So I need money.”

Some store owners, even those in areas of San Juan that are heavily policed, worry that carrying so much cash could leave them vulnerable to a robbery.

In post-hurricane San Juan on Monday, commerce picked up ever so slightly. With a little effort, you could get the basics and sometimes more: diapers, medicine, or even a gourmet hamburger smothered in fried onions and gorgonzola cheese.

But almost impossible to find was a place that accepted credit cards.

“Cash only,” said Abraham Lebron, the store manager standing guard at Supermax, a supermarket in San Juan’s Plaza de las Armas. He was in a well-policed area, but admitted feeling like a sitting duck with so many bills on hand. “The system is down, so we can’t process the cards. It’s tough, but one finds a way to make it work.”

Ultimately, turning the ATMs back on probably ranks lower on the island’s list of priorities than, say, keeping the diesel generators that are powering hospitals in operation, or evacuating 70,000 people from a river valley in danger of being flooded after a nearby dam failed.

Depending on how long outages persist, Puerto Ricans in some areas may need to resort to bartering for essential goods, as residents find ever more creative ways to transact in the absence of modern technology.
 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
NoDecaf's picture

BTC/Au debate in 3..2..1

Stuck on Zero's picture

I guarantee that any store owner there would accept PMs. And that suggests that there is a big business opportunity there. Bring a ton of cash and an experienced eye and open a jewelry for cash operation.

Pinto Currency's picture

BTC works fine with no power.

And the fact that it has no intrinsic value enhances its acceptance after an economic crash when trust is lost.

#Bitcointozero

tmosley's picture

Predicating your investment thesis on the idea that we will be without power forever seems foolish and rather bleak.

If you are so certain that we are going to go back to a pre-electrical world forever, why not beat the rush and kill yourself today?

runswithscissors's picture

After I starve to death my bitcoin will still be safe.

beemasters's picture

I guess that answers why TPTB is pushing so hard for cashless societies. People will be helpless and need a savior.

Tarzan's picture

Wonder if all of those cash only grocers are excepting bitcoin, no?

And, for the very few who refuse it, if they'd except 1/10th oz silver coins?

I'm betting you'll find a loaf of bread a bit easier with physical

Pinto Currency's picture

Here's the remedial version tmosely:

1) During an emergency, often times power is out.  If bitcoin won't work when the power is out, then during an emergency when the power is out, bitcoin won't work.

2) Aristotle's 4 rules for money include that all money must have intrinsic value.  Even when there is electrical power.  Expecially during an economic crisis.

Paraphrasing Voltaire: All cryptos will achieve their intrinsic value of zero.

Mr 9x19's picture

 regarding other article today i would simply add that you cannot shove btc in your ass.

that makes the only good argument for btc i can find for that scam.

lasvegaspersona's picture

Then why does it itch like that...'down there'?

secretargentman's picture

That's not entirely true... There are paper wallets. 

tmosley's picture

Is that not ENOUGH of an argument?

I, for one, don't want ANYTHING going up my ass.

fulliautomatix's picture

Well, how about this - 

at the moment, in this location, btc is unable to do the job it is designed to do - cash is doing all the work. Does btc have a design implementation that will account for (or ameliorate) such a circumstance occuring again (as it will) or does cash still need to exist to cater for this class of circumstance?

FIAT CON's picture

I would like to see a circumstance like this, where PM's  were used (happily and successfully) and how it was a good thing because, there was shortages of cash and without the PM's coming out of hiding, people would have really suffered!

 It would sure reinforce why we should store them in the first place, as well as being great in catastrophe.

 It would be an eye opener for many. The statement would be made, that people store PM's because they hold their purchasing power, unlike Fiat.

 Perhaps the sheeple would learn the difference between fiat and money, and understand why we want nothing to do with the former.

It would definatley be what we need to reverse the system and return to a Gold backed currency.

I know, I know...I had a dream!

tmosley's picture

1) Why do you need access to 100% of your money when the power is out? Are you so poor you have to choose between an investment portfolio and weather preparedness? 

2) Bitcoin has tremendous intrinsic value. It is a distributed ledger that allows your money to exist everywhere at once, and allows you to transact with anyone in the world. Electrical power is pretty common these days.

I don't expect you to be able to process these arguments, as you are deep in the grip of cognitive dissonance.

fulliautomatix's picture

access to any money at all would be great! is the problem. There's more cash about and able to move than btc.

Pinto Currency's picture

tmosely: "Bitcoin has tremendous intrinsic value. It is a distributed ledger that allows your money to exist everywhere at once, and allows you to transact with anyone in the world." What you are discribing is not intrinsic value of the Bitcoin unit but ease of use of all cryptos - Bitcoin is a super handy unit of nothing.

There are going to be 10s of thousands of crypto types and the cryptos with units without intrinsic value are going to zero.

Now if you wanted to use Crypto gold or silver units where the metal was guaranteed vaulted and redeemable, then now your are talking.

One added problem remains however in that Blockchain is hacked / hackable.

Ink Pusher's picture

Even if you miraculously managed to access your digital wallet, I still wouldn't sell you any food or water because like most of the civilized world in a shitty situation, I wouldn't accept anything virtual ,including promisary notes,cheques or drafts from some bank.

* Unless we were in Puerto Rico and it was Peter Schiff's Gold Bank.

Schiff has a #1 rating with me.

 

FIAT CON's picture

The US dollar is on its way out, and the same will happen to other Fiat Currencies.....hence none of these are backed by Money.

 Bitcoin in itself  represents some quantity of fiat, It does not represent real money!

 

Now if Bitcoin was backed by gold, it could be a great thing, but until then it is just another Fiat!


Think for yourself's picture

No. Bitcoin represents a specific non-fiat quantity of bitcoin. It just happens to be priced in fiat, because it happens to interact with fiat. You could just as well price it in Ag/Au or even oil, whatever. It's nothing more (and nothing less) than a chunk of digital scarcity with a user base. Sure you can create more chunks of digital scarcity (altcoins) but it's the user base x available scarcity that gives it value. Not fiat.

FIAT CON's picture

You missed my point... it is not backed by anything real....Fiat is not money.

I would like to take some gold to a bitcoiner and purcahse only enough bitcoin/s to complete the financial transaction. This would make it safer. only trade phys gold to do the day or the weeks transactions, nothing more.

 I would like to see a world we are all are own banks. Where we store are own wealth away from the banking system. (there would be much less bankers sucking all of us dry with their wages and bonusses).

Your money is insured, but you are on the end of the list to collect the insurance when and after the bank crash.

 

 

rex-lacrymarum's picture

There is no such thing as "intrinsic value". All value judgments are subjective. 

Jackson's Luck's picture

Nice to see someone here knows what they are talking about. So much confusion on ZH. I can't believe how many people still use fiat colloquially in place of currency. I wonder if Mises would have thought differently about money's need to have a consumption or industrial use apart from its use as a medium of exchange in the presence of a blockchain. Jeffery Tucker sure seems to think so.

gilhgvc's picture

when the banks REALLY start to worry about bitcoin, you won't HAVE any bitcoin. wake up. it is FAKE, based on the INTERNET.....unless I can hold it in my hand..it is worthless.

tmosley's picture

>you won't HAVE any bitcoin

How?

FIAT CON's picture

Be your own bank, stack...use bitcon as a medium for exchange nothing more.

ejmoosa's picture

Don't need the food in a week when the power comes on(or a month or a year).

Need it now.

https://www.bing.com/videos/search?q=Wimpey+popeye&view=detail&mid=57136...

tmosley's picture

Then keep some food on hand.

Nobody in PR is trading gold for beans and tortillas right now, either.

fulliautomatix's picture

here is where you need to be able to build the infrastructure that supports btc - out of btc. So where's the btc based co. tha is handing out the free solar panels and stuff?

therover's picture

Even if the island was at full power, I don't think there would be many Puerto Ricans eating tortillas.

FIAT CON's picture

And you know this how????

 You are there witnessing all of the purchases?

 I'd bet you would be wrong tmosley!

I will accept gold and silver from all of my customers...anytime!

hmmmstrange's picture

I guarantee that there has not been a single barter transaction using PMs in 20 years in Puerto Rico.

Stuck on Zero's picture

Hundreds of jewelry stores and they don't accept PMs?

ejmoosa's picture

Peter Schiff has been living there the last several years...and he would barter.

tmosley's picture

What is your guarantee?

Will you bet your life on it?

And there is also the question of price. You going to spend a thousand dollars worth of PM coins for a few bags of rice and beans?

ronron's picture

last night you said bit coin would save some ass. looks like your the ass.

BarkingCat's picture

I have silver bullion. 1 oz is about $17 right now.

I think I could use it if I had to.

Of course I also have emergency cash so that would have to get spent first before I would touch any PMs.

tmosley's picture

>I think I could use it if I had to.

Better think again.

https://www.youtube.com/watch?v=WAaVK5AkZzI

FIAT CON's picture

Great to see Mark trying to wake up the sheeple, even if he has to embarras the many he does.

gilhgvc's picture

if it meant the difference between survival and death...they can have my fucking car

FIAT CON's picture

thousand dollars worth of PM coins for a few bags of rice and beans?"

 That would be just foolish!

You mentioned Coins Plural...why would anyone have to give more than one PM coin for rice and beans...1oz of silver would buy plenty...why would you have to give multiple coins?

 

Why would anyone do that...Stupid?

 

carbonmutant's picture

Not everyone has the cash they need.
There is a lot of bartering going on...

Paul Kersey's picture

as business owners will no doubt be tempted to avoid declaring some of their revenues, depriving PR’s ultra-corrupt government of badly needed revenue.

"SAN JUAN, Puerto Rico (AP) — A federal jury on Friday found four people guilty on all charges in one of Puerto Rico’s biggest public corruption cases in the past decade. They were the last of the 10 people to be charged and convicted in the fraud scheme that generated some $2 million."

"Wednesday, December 7, 2016
Mayor of Gurabo, Puerto Rico, Arrested for Public Corruption"

"All 3.5 million Puerto Ricans residents were without power for a second day Thursday following a fire at the grossly inefficient and allegedly corrupt government-owned electrical utility."

And it goes on and on and on, but no one bothered to send Noah with his ark.

HRClinton's picture

"Cash Only" surely means that they will pay their taxes in cash, rather than send checks? No?

Or does it mean that Gold and Silver are now prevalent in the Doom economy? Not that either?

No Debit cards?  No EBT? Then how is one supposed to get their Gib-mez?

 

What?  Cash, Ass, Gas and Glocks rule?

MoreFreedom's picture

How can you trade bitcoin when you and the guy who has something you want to buy, don't have power for your computers, and without any internet connection either. 

Cheating the taxman is standard practice in PR: taxes are higher than in the US for all income levels.  When I lived there, I asked one of my colleagues about the PR income tax, and he said "Here, do you want to see my lies?" and handed me his tax return.  Most of those businesse owners will keep a lot of the cash, and declare a loss or very small profit.

PR is extremely corrupt, because that's the way the government is.  Look anywhere in San Juan and you'll see most every home has burglar bars over the all the windows and doors. For good reason.

 

 

lester1's picture

No Bitcoin transfers?

Antifaschistische's picture

I'll stay out of the bitcoin, gold, silver, rhodium, copper, etc debate...

this event is just a reminder....we live in a fiat world, and..

Electronic Fiat IS NOT EQUAL to Physical FIAT

If you've got a lot of the first...it's ALWAYS good to keep a pile of the second.