Spreading the risk: too much digital and in cash

Section62

Eco_Miser said:

For the past several millennia, civilised society has kept records of property and debt in easily readable form - on paper, parchment, vellum, birch bark, notched sticks, clay tablets. We had communication systems that consisted of messengers moving from place to place carrying written or verbal messages. In the current millennium we have largely abandoned that, and keep all our records and communications as representations of 0s and 1s in various media, and need electronic machines to read those representations, and then to interpret the 0s and 1s into something meaningful to us. This is why a collapse of the Internet, or just widespread electronic failures, will  likely cause societal collapse, we have abandoned and dismantled the previous systems we had built over the 100,000 years of human existence. Yes the human race will survive, but many of its members will not.

TL;DR: The world functioned fine without computers, but it won't function fine if the computers are suddenly turned off.

What does "a collapse of the Internet" mean though?

....given the roots of the internet came from a desire to develop a network (with military use in mind) which was capable of withstanding (limited) nuclear war.

What kind of event do you envisage that would cause "collapse of the Internet" (and render useless all of the data stored on computers attached to it) - and would it be fair to say that such an event was probably likely to cause societal collapse whether or not the internet existed in the first place? (e.g. widespread nuclear war)

Eyeful

Eco_Miser said:

For the past several millennia, civilised society has kept records of property and debt in easily readable form - on paper, parchment, vellum, birch bark, notched sticks, clay tablets. We had communication systems that consisted of messengers moving from place to place carrying written or verbal messages. In the current millennium we have largely abandoned that, and keep all our records and communications as representations of 0s and 1s in various media, and need electronic machines to read those representations, and then to interpret the 0s and 1s into something meaningful to us. This is why a collapse of the Internet, or just widespread electronic failures, will  likely cause societal collapse, we have abandoned and dismantled the previous systems we had built over the 100,000 years of human existence. Yes the human race will survive, but many of its members will not.

TL;DR: The world functioned fine without computers, but it won't function fine if the computers are suddenly turned off.

1. So your argument boils down to, in the last 25 years a lot of the records and communications has been digitized, so the world cannot function as well if the all computers stop working at once.

2. The same can be said after Plagues & two World Wars. So nothing new there!

3. You have not explained what is going cause all the computers & their backups around the world all suddenly stop working at the same time. 

Linton

Eyeful said:

Eco_Miser said:

For the past several millennia, civilised society has kept records of property and debt in easily readable form - on paper, parchment, vellum, birch bark, notched sticks, clay tablets. We had communication systems that consisted of messengers moving from place to place carrying written or verbal messages. In the current millennium we have largely abandoned that, and keep all our records and communications as representations of 0s and 1s in various media, and need electronic machines to read those representations, and then to interpret the 0s and 1s into something meaningful to us. This is why a collapse of the Internet, or just widespread electronic failures, will  likely cause societal collapse, we have abandoned and dismantled the previous systems we had built over the 100,000 years of human existence. Yes the human race will survive, but many of its members will not.

TL;DR: The world functioned fine without computers, but it won't function fine if the computers are suddenly turned off.

1. So your argument boils down to, in the last 25 years a lot of the records and communications has been digitized, so the world cannot function as well if the all computers stop working at once.

2. The same can be said after Plagues & two World Wars. So nothing new there!

3. You have not explained what is going cause all the computers & their backups around the world all suddenly stop working at the same time. 

It need not be at the same time and the key problem is not computers stopping working but rather their losing the ability to communicate with the rest of the world because of a widespread breakdown in the global internet infrastructure.  For example here is the possibility of an epidemic of cutting of international cables. distruction of satellites etc. Or countries restricting the internet to enforce sanctions.

Once computer communications are compromised the economic world could begin to collapse, starting with the banking system.  Whether computers are backed up or not becomes irrelevent.

But returning to the OP....

ISTM to be a fundamental error to believe your portfolio can protect you against all possible circumstances. Any investing at all requires some basic assumptions of how the world operates.  If those assumptions prove to be invalid all bets are off.  If you need protection against the extremes you should develop a separate plan covering all essential aspects of your life. Your investments would probably not be one of them,

Such a plan would not have much to do with whether you hold your wealth in gold, investments, property or bitcoin.  How would you sell your gold? How do you sell your property without proof of ownership?  To whom and how do they pay you?  

Accept the limitations of what investing can reasonably achieve and work within them.  There are plenty of risks within the system that can and need to be managed without bringing in doomsday.  If the end of the world as we know it comes to pass you will just have to cope, being in a no better or worse position than your neighbours

Eco_Miser

Section62 said:

Eco_Miser said:

For the past several millennia, civilised society has kept records of property and debt in easily readable form - on paper, parchment, vellum, birch bark, notched sticks, clay tablets. We had communication systems that consisted of messengers moving from place to place carrying written or verbal messages. In the current millennium we have largely abandoned that, and keep all our records and communications as representations of 0s and 1s in various media, and need electronic machines to read those representations, and then to interpret the 0s and 1s into something meaningful to us. This is why a collapse of the Internet, or just widespread electronic failures, will  likely cause societal collapse, we have abandoned and dismantled the previous systems we had built over the 100,000 years of human existence. Yes the human race will survive, but many of its members will not.

TL;DR: The world functioned fine without computers, but it won't function fine if the computers are suddenly turned off.

What does "a collapse of the Internet" mean though?

....given the roots of the internet came from a desire to develop a network (with military use in mind) which was capable of withstanding (limited) nuclear war.

What kind of event do you envisage that would cause "collapse of the Internet" (and render useless all of the data stored on computers attached to it) - and would it be fair to say that such an event was probably likely to cause societal collapse whether or not the internet existed in the first place? (e.g. widespread nuclear war)

The original concept for the internet was to have sufficient redundancy in routing to keep the US military going, even during a nuclear war. The modern internet is very much a commercial venture, (even though there are non-profit organisations at its heart, setting the standards) with a very  much larger userbase, and rather less redundancy.

I wasn't envisioning any particular event for the "collapse of the Internet"- that was inherent in the OP. Rather I was pointing out that previously, all records that survived the immediate disaster could be easily read, but modern records need precisely the right machines, and the right version of the software, to read them.

Apparently, high sunspot activity can disrupt computers in general, and communication links in particular, which without the reliance on computers would not be a big problem.

Individual countries or blocs blocking external internet traffic would also cause a partial collapse of the internet, as would physical damage to major trunk links, like undersea cables.

John464

I find it quite thought provoking to look in museums at the hoards of coins that have been dug up and think of the people who buried them.
My conclusion was the only way to be sure of not losing your money is to spend it and have fun with it while you can.
I go part way - spend some, save some.

Section62

Eco_Miser said:

The original concept for the internet was to have sufficient redundancy in routing to keep the US military going, even during a nuclear war. The modern internet is very much a commercial venture, (even though there are non-profit organisations at its heart, setting the standards) with a very  much larger userbase, and rather less redundancy.

Is there less redundancy?  Isn't one of the consequences of that much larger userbase that the internet has grown in capacity (and coverage) such that much of it could be lost and still be far bigger than the original concept?

I'm no expert on the subject, but I suspect there are multiple layers of contingency plans in place to cope with certain events - not unlike the way the National Grid is operated - which may, for example, see non-essential traffic stopped to maintain capacity for what are deemed essential services.  I'd also guess financial services would be one of those things deemed 'fairly essential', or at least more essential than TikTok.

Much of the internet is commercial in nature, but we all know that governments around the world take an active interest in how it is operated (including what you can do with it) - up to and including whose equipment is purchased to operate parts of it.

Eco_Miser said:

I wasn't envisioning any particular event for the "collapse of the Internet"- that was inherent in the OP. Rather I was pointing out that previously, all records that survived the immediate disaster could be easily read, but modern records need precisely the right machines, and the right version of the software, to read them.

Again, I'm not an expert, but I'm not sure the BiB is necessarily correct.  Yes, there are systems using hardware and software which is a bit archaic, and primadonna-ish (and banking is very much a case in point), but data is data.  If you have a device which can read data from the storage medium, and have a reasonable idea what the data is meant to look like, then software can be available to make the data accessible again.  Not necessarily a speedy process, but then that is why sensible organisations (like banks) should be keeping multiple backups using different methods as part of their disaster planning.

This is the crux of what the OP is getting at.  The "digital 'armageddon'" would require an event that nobody seems able to define, coupled with multiple failures by the financial services industry to put in place measures to protect against risks which exist at a much lower levels.  For example, if they are running a system on 'precisely the right machine' then what are they going to do if an obsolete component on one of the boards decides to fry itself? That could happen any day, it doesn't require sun spot activity or anything like that to make it happen.

Eco_Miser said:

Individual countries or blocs blocking external internet traffic would also cause a partial collapse of the internet, as would physical damage to major trunk links, like undersea cables.

What has been going on in the Baltic recently is a concern, as are the activities of the Yantar.  But what would a 'partial collapse of the internet' caused by those kinds of acts of (alleged) sabotage look like, and is it realistic to think that would lead to the wiping out of my savings and investments existing on the computers of multiple providers?

There is some stuff going on which all of us should be aware of, but at a consumer finance level I don't (yet) see a cause to withdraw money and buy gold instead.

EthicsGradient

A collapse of the internet is equivalent to a collapse of the postal system. You lose communication, but the records still exist. If a branch office couldn't communicate with another by post, you'd have still had a problem. Destruction of a bank's computer is the equivalent of a fire destroying paper records. Banks take regular backups, stored in different places (the internet making this a lot easier than before). The hard drives are readable, and software can be recovered or rewritten.

I don't think a "collapse" is the danger; it's hacking. When broken in to, billions might get moved, very quickly (as just happened with crypto). You then get arguments as to which records is the legal one.

booneruk

I'm glad someone finally mentioned fire. That was a huge risk in the pre-digital era, as was physical theft - which were risks probably impossible to recover from. At least now we have backups, cryptography and then there's technology like blockchain that could bring more resilience.

Section62

booneruk said:

I'm glad someone finally mentioned fire. That was a huge risk in the pre-digital era, as was physical theft - which were risks probably impossible to recover from. At least now we have backups, digital fingerprinting/cryptography and then there's technology like blockchain that could bring more resilience.

...as anyone hoping to find relatives on the 1931 England and Wales Census is going to discover (if they don't know already).

AlanP_2

I'm surprised to see how many posters seem to think that governments may have a plan for such a situation. Given how much pre-planning had gone on for a pandemic prior to COVID that seems overly optimistic by a long way to me.

I worked in a public sector emergency Planing and Business Continuity  role for a few years and the briefings from health partners was that a pandemic was a "when it happens" risk not an "if it happens" risk.

This was reflected in the National Risk Register, see here for the 2025 edition if you are interested

https://www.gov.uk/government/publications/national-risk-register-2025

(There is an unpublished National Security Register as well which is more likely to have additional "nation state" level risks identified.)

Despite this, and to a degree understandably, there was limited preparation at a strategic, national level as putting mitigation measures in place had costs and there isn't an unlimited supply of money.

Drugs, PPE etc have a limited shelf life.

Having a few empty hospitals and associated staff on standby "just in case"  whilst there are long waiting lists anyway is a sure fire vote winner the vast majority of the time 😱