Shauna, for reasons soon apparent, is what I’ll call her. She approached me some weeks ago, asking for guidance. You might be interested in what happened.

“Your book talked about the wisdom of having cash,” she said, “you know, actual money you can lay your hands on. At first I thought that was extreme. I mean, if I had $75 in cash in my purse, it was a big deal. Credit and debt cards? Yeah, tons. But who needs cash anymore?”

Exactly. We’re turning into a currency-less society. Money has been digitized in a process now completely embraced and propelled by large financial institutions. Think about it: Most of us are paid incomes or pensions or salaries by direct deposit. Then we dispense it for bills, mortgage payments or other obligations by cheque or transfers. We pay utilities online, buy groceries with a debit card and  gas with a credit card. We make RRSP contributions or pre-authorized payments without seeing actual money. When we crater chequing accounts, savings are automatically debited or lines of credit mined. The only time many people see actual folding money is when they hit an ATM – and there are daily limits for withdrawals, usually in the hundreds of dollars.

So, what if?

What if we had another financial calamity this October, like last year? What if the trillions in bailouts and the zero interest rates didn’t work and the economy sank? What if the government or the Bank of Canada declared a bank holiday for a few days, or a week, to prevent a run on deposits? Or a month?

After all, the big banks have enough cash on hand to cover only about 10% of the liquidity Canadians have in just chequing and savings accounts. That means if confidence in the system was questioned and  people started to line up here, as they did outside a British bank last autumn, nine of ten would be SOL.

Or, perhaps we need not contemplate anything so profound. How about a crashing Internet, brought about by a terrorist attack, a technical failure or a solar storm? After all, in a digital world in which banks now keep your money on a server instead of in a vault, shit can happen.

“But,” Shauna said, “I thought about the point you made about insurance. If I have life insurance or fire insurance, it doesn’t mean I’m going to die or have my house burn down. So maybe I need money insurance.”

Smart girl. And that’s why she came to me. She had lots of money, and wanted to keep some close at hand.

At least, she thought she had lots of money. The bank thought otherwise.

Shauna made a decision, wise or otherwise, to withdraw $120,000 from her accounts (savings, chequing and RRSP) and convert it into paper money. She then planned to put 80,000 of it in two safety deposit boxes at two banks near her house in Edmonton, and keep the rest in a safe hidden in the ductwork of the suburban home she shares with her husband and their dogs. This was exactly the amount of cash, she figured, they would need to live for two years. She also told me that although she knew a bank holiday would shut down her access to a SDB, any disruption like that would last – at most – weeks. So, the home cash was designed to tide her household over for many months.

Radical doomer thinking? Maybe. But that’s not the point of this story.

Shauna followed some of the rules in “After the Crash.” She called her branch (one of the Big Five banks) a week in advance to tell them she’d be coming in for the money. She asked for it to be bundled in twenties and fifties. And she informed the Customer Service Manager of exactly what time she’d be there, asking that the cash be ready and given to her in a secure area of the bank.

Just to be sure, she went online to her bank’s site and sent a query to its help desk. ‘Is there a limit on how much money I can take out of my account?’ she asked.

The response: “Thank you for asking about withdrawing funds personally from your account at your local branch. You can withdraw any amount available in your account. However, if you are withdrawing several thousands of dollars then we recommend notifying your branch in advance of the day you wish to make the withdraw to ensure enough of cash is on hand.”

Twenty minutes later her cell rang. It was the branch manager, informing her there was a ‘bank policy’ disallowing large cash withdrawals by customers. He said he had called head office after her request, and that was the answer. Period.

Shauna was incredulous. But, she said, this is my money. And I want it.

Hours later the guy called again. She would be allowed to make a series of six withdrawals of a maximum of $20,000 each, and there must be five regular banking days (a calendar week) between each withdrawal. This, he said, ‘is for your own safety.’

And how could that be? Making six trips to the bank and back with six bags full of money would just increase her chances of losing it to theft or misadventure by a factor of six. More profoundly, what right did the bank have to restrict her access to her own money? Where was this ‘policy’ that justified a bank rationing assets that it did not own? Why was there such fear of converting digital blips into marketable pieces of paper?

In the end, after intervention, Shauna got her money. But to do so she was required to make two withdrawals of $60,000, in two trips one week apart, and to a branch other than her own. Before giving over the funds, the bank insisted each time she sign a release stating that she understood the dangers of making a large cash withdrawal, that she held the bank and its employees blameless for any consequences, and that she declared the bank’s employees had strenuously warned her against the action she was taking. It was, she told me, over the top. “I felt like I was robing the place, you know, like Bonnie and Clyde…”

Certainly there are those who would judge such a move rash. Shauna’s hundred and twenty grand will earn her no interest, pay no dividends and result in no capital gain. It can be lost, destroyed or stolen. It will be eroded by inflation.

But, it’s also close at hand for a dark day. It will not disappear in an ill-timed investment. It is under nobody’s control but hers. It’s insurance against the unknown and the feared – and what else is insurance for? Mostly, though, it’s real.

And she tells me it is so much more valuable now because of what she knows: they don’t want you to have it.

US housing slump not over yet?