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Let's say reality gets modified by someone evil, and all the currency in Earth (in any form, cash, bitcoins and banks) all simply disappear in an instant.

What is going to happen, assuming the government can recreate currency? How is international trade going to work?

How are people going to do their daily activities when their is no medium of exchange? Will people have to resolve to barter temporarily?

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closed as too broad by Ghanima, Burki, JDSweetBeat, bowlturner, James Apr 28 '15 at 13:54

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  • $\begingroup$ What is going to happen if all the currency in the world simply disappeared at once? - There will be no means of exchange of goods and services $\endgroup$ – Barnaby Apr 27 '15 at 20:38
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    $\begingroup$ In your question, you note that it's done by someone 'evil'. Not sure this would be such a bad thing ;)... $\endgroup$ – Mikey Apr 27 '15 at 20:42
  • $\begingroup$ When you say 'disappear' do you mean like all electronic record is lost? Is credit infrastructure still there (ie, visa)? @Mikey - far too true, 99% of humanity would stand to gain $\endgroup$ – Twelfth Apr 27 '15 at 21:27
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    $\begingroup$ Does no one read xkcd? $\endgroup$ – Samuel Apr 27 '15 at 21:39
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    $\begingroup$ I don't really understand what the disappearance of currency means. Do you mean that the concept of ownership disappears? Like my bank account might be empty, but I still own a house worth X dollars, and I still owe a mortgage worth Y, and my contract with my employer still mandates that he pays me Z. $\endgroup$ – Fhnuzoag Apr 28 '15 at 1:03
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First thought that comes to mind is the barter system, but this is unlikely. Too many different types of things are needed/wanted now for an effective barter system.

Assuming the government releases that it will recreate the currency, the next thought that comes to mind are IOU's.

If everyone was trusting enough, this would actually work. Write IOU's to pay for stuff, and later, redeem said IOU's from the government.

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    $\begingroup$ This is actually how the monetary system actually works. Except it would be annoying to keep exchanging the IOUs with the government, so we just give them directly to businesses. Most of them are electronic, but a few are paper, in denominations of 1, 2, 5, 10, 20, 50, and 100. $\endgroup$ – 2012rcampion Apr 27 '15 at 23:58
  • $\begingroup$ @2012rcampion Exactly! In otherwords, nothing big will happen. We'd essentially be making our own bills :P $\endgroup$ – Aify Apr 28 '15 at 0:03
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    $\begingroup$ @2012rcampion - Well, it's how the monetary system used to work, until we abandoned the gold standard. Now they aren't backed by anything, so there's no way to exchange them with the government. $\endgroup$ – Bobson Apr 29 '15 at 17:23
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I'm not sure exactly what you mean, and the uncertainty is important. By "currency", do you mean physical representations of money, such as Federal Reserve Notes or 5-pound notes? (This would seem to rule out bitcoins, which you have specifically mentioned.) Or are you talking about money in general?

In the first case, the results would be traumatic, and in some cases disastrous, but possibly not catastrophic on the larger scales. The bulk of the US economy, for instance, runs on credit rather than cash. Credit cards and debit cards, direct deposit and direct debit would still work. However, any cash transactions would obviously come to a screeching halt until such time as the US Mint could print up replacement currency, and distribute it. Which is the problem. With no way to tell who had how much cash just before the Disappearance, that distribution would be a political nightmare. In the meantime, barter would hardly take up the slack, and IOUs would only find limited use, particularly in low-income areas. There are various reasons, ranging from low values of social trust to the problems that normally cash-dependent businesses would not be able to function in the absence of cash, so local workers (who need the cash to spend on food and such) would lose their jobs as the businesses folded.

In other parts of the world, where cash is king, the results would be disaster. At the bottom of the economic ladder, subsistence farmers would be largely untouched. In the short term, they grow their own food and, if the seasons are right, won't starve immediately. The large concentrations of urban poor, though, will starve unless the local governments step up and organize distribution, and on the basis of disaster response history it does not seem likely that all of them will do so effectively. And I doubt that they'll go quietly.

This is all very bad, but it gets much worse if money (in the general sense) disappears. All credit and debit cards lose function, and all bank accounts evaporate. Not only does money include credit, it includes debt. If it all disappears, among other things this eliminates the status of all mortgages and loans. For an enormous fraction of the economy, title to real assets becomes impossible determine.

All economies above the level of barter work, to some degree, on trust. That is, if you give me money in exchange for a good or service, I'll only take it if I trust that I can find someone else who shares my opinion of what the money is worth. This includes a certain level of expectation that, if you've cheated me (by giving me counterfeit bills, for instance) that you'll end up in trouble with the Law, or that I'll be able to find you and take it out of your hide. If all the money has disappeared, replacing it would be a ticklish prospect - for instance, the temptation to start printing counterfeit bills would be enormous, and developing trust in total strangers is not an easy process.

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Probably not as big an impact as you might think.

In the United States, fiat money, that is to say, legal, physical money (that's only a simplification), accounts for only 10% of "money". We deal largely on credit and standards.

In other countries, sometimes their fiat has no value whatsoever. In Ethiopia and Nepal, we were encouraged to use US Dollars. Surely the reprinting of US Dollars after this anomaly, would be translated just as they are today. Prices are regulated and set artificially, and the value of fiat can be lost any time.

However, this could have a different effect. With countries such as Gulf countries pegged to the US Dollar, this could be an opportunity for a world currency: not that I think we're mature enough yet for it.

Until then, a shirt that costs \$15 will cost \$15, and I will have to pay credit until the US Treasury prints some greenbacks.

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