What a Blackout Taught Me About Financial Preparation

Right after 4 p.m. on a hot Thursday in August, the power failed.

All of us at the Wall Street Journal’s offices in lower Manhattan looked around. Everyone’s computer screen was black. The TVs—perennially tuned to CNBC—were off. The background drone of the air-conditioning system was gone.

All was suddenly silent in an eerie way.

You could see the same question on everyone’s face: What’s going on?

This was 2003, not even two full years after 9/11. Was this the start of something similar?

Something bigger?

No.

Turns out it was a failure at a FirstEnergy power plant in Ohio—and it had taken down the electrical grid in parts of Canada and the US East Coast. At the time it was the second-largest blackout in global history.

But I do not come to you today to reminisce about America’s aging power grid or the hours I spent in the dark in NYC. (Though I will note that I was surprised at how cordial New Yorkers can be, despite their reputation. Manhattan became a giant outdoor festival, with restaurants and bodegas grilling and distributing for free—or whatever anyone could afford to pay—food that otherwise would have perished in warming freezers and fridges.)

No, I come to you because of two recent incidents that had me thinking about that August day and night in a darkened Big Apple.

1. The CrowdStrike fiasco that took down networks all over the globe because a simple software update went awry.

2. The story of Taryn Compton, an Aussie women who needed $3,500 AUD from her bank to manage a small home renovation.

Let’s start with Taryn…

She wasn’t looking to borrow the money from Australia & New Zealand Bank, known locally as ANZ. She just wanted to withdraw the cash from her own account.

But the bank had recently instituted a policy in which some bank branches no longer hold any cash. All monetary transactions must go through an ATM. Which on the surface is a bit ignorant. Why operate a bank branch if you’re not going to actually offer basic banking services? Sort of like going to a bakery for fresh bread only to find out that all the bread the bakery bakes is now sold through the 7-Eleven down the street.

Taryn did not have her bank card with her and so was unable to use the ATM. The bank teller apparently helped her set up a banking app on her phone so she could use the ATM without her card—but this didn’t work.

Taryn, frustrated, closed her account and moved all her money to another bank that doesn’t hold a grudge against cash. No one wants to go to a bank only to realize your cash is unavailable.

Now, as for CrowdStrike… maybe you were caught up in that. I saw that flights were befouled all over America. I read stories about people struggling to access bank accounts. Hospitals canceled surgeries.

Even as I write this a few days after the event, the CrowdStrike fiasco is still rippling through various IT systems and companies.

These two events, seemingly unrelated, share a commonality: Civilization’s extreme reliance on technology, and the fact that when said technology burps and hiccups, the impacts hit hard and fast.

Back in NYC, I had exactly $1 in my wallet when the blackout hit. I had no way to access cash because there wasn’t an ATM on the island that had power. I’m thankful I had my office-colleague Andrea to help me. She had cash and a couch I could crash on for the night since I had no way off the island.

That event taught me a lesson: Have cash and gold stashed away at home.

Granted, I would have had no way of crossing the Hudson River into New Jersey to access my cash during the blackout, assuming I’d had any squirreled away. But had the power outage lasted longer than a day, I am certain there would have been ferries and such that popped up to get people off of Manhattan and into Jersey.

Either way, the blackout taught me to be prepared financially in a way very different from traditional financial preparation…

Taryn’s experience at ANZ and the CrowdStrike event only serve to underscore that point.

We’re 21 years past the 2003 blackout, and as a society we are even more reliant on technological services today. Taryn found she had literally no way to get hard currency except from a machine that wouldn’t work—even though she was at a bank branch!

So much of our daily world is reliant on digital systems that, when they fail, expose the frailty of modern finance. And I include crypto in the indictment. No matter how much I stand behind crypto as a solution to America’s debt problems, the unavoidable fact remains that crypto is useless if there’s no way to power the blockchain.

As such, this dispatch is a call to action: Stash some cash and gold at home.

How much is up to you and your comfort level.

When I lived in Louisiana in the years after the blackout, I had a heavy-duty safe installed in my walk-in closet, and I stored about $1,000 in cash inside as well as $5,000 or $6,000 worth of gold and silver bullion and old coins. (I had all of that hidden under the safe’s metal floor—a slat that slid out—so that if anyone broke in and forced me to open the safe, all they’d find inside were family passports, a bunch of documents, some old baseball cards, and a few keepsakes… nothing that a thief would necessarily want to take.)

During one of the hurricanes—either Katrina or Gustav, I don’t recall—I had to call upon the cash to buy groceries because the power was out for several days and we hadn’t really stocked up before the storm’s landfall. I found a Winn-Dixie that was open and accepting cash only (all groceries hand-tabulated on a calculator!). So my stash of readily accessible greenbacks made buying groceries easier.

Chances are, you’re never going to need to dip into your emergency reserve. Then again, we live in an increasingly dyspeptic world, and one that is about 99% reliant on the power grid to function.

Having old-fashioned cash and gold within reach will make crisis-survival much easier.