Is the Fed preparing for a run on the nations banks? : LUSENET : TimeBomb 2000 (Y2000) : One Thread

On either Tuesday (8/18) or Wednesday (8/19) I could have sworn that I heard a report from two different news sources that the Federal Reserve has ordered an additional $50 billion in currency to be placed in storage in government vaults. This money is supposedly being socked away in case there is a run on the banks in the closing months of '99.

The $50 billion number supposedly came from the Fed's estimate that ~70 million families will need two weeks worth of cash (~$360) on hand following 1/1/2000.

Has any one else heard of this development? I can't find a trace of it on the Web? Am I hallucinating?

If this is true, I would consider it to be the first "official" warning that someone, somewhere expects some serious economic consequences as a result of Y2K problems.

-- Brian E. Smith (, August 20, 1998


See the following Link:


-- Roger (, August 20, 1998.

I saw an article in the NY Times, which I now can't find, that says that the Treasury will print $200 billion more currency than they normally do. They always print extra currency around Christmas, then withdraw it during the rest of the year as it wears out. This time around, they're printing extra, just in case. They said they would compensate by printing less in 2000.

$200 billion is more than $1,000 per family. Sounds like enough.

-- Andrew Koenig (, August 20, 1998.

A $1000.00 sure would not go far in this house. My son's college expenses are four times that ...and due in January!

-- Dave (, August 20, 1998.

Fed Plans Cash Reserve for 1999

Copy & paste the URL.


-- Pastor Chris (, August 20, 1998.

For those who don't like to work, here is the article:

Fed Plans Cash Reserve for 1999

DAVE SKIDMORE Associated Press Writer

WASHINGTON (AP) - The Federal Reserve is planning to increase its reserves of currency in case Americans want more cash in their pockets on the eve of the new millennium.

By the end of next year, $200 billion in currency will be stored in government vaults, up from the $150 billion normally held in reserve. That's in addition to the $460 billion in notes circulating in the United States and abroad.

``It's purely a precautionary measure,'' said Clyde Farnsworth, director of Federal Reserve Bank operations and payments systems. ``We want to be able to meet increased demand from commercial banks should private consumers request more currency.''

The thinking is, Americans might worry about whether credit cards and automated teller machines will still work after the new century dawns. Many older computers read years by the last two digits and would interpret 2000 as 1900.

An army of computer programmers is working intensely to correct old computer codes, but they probably won't be able to correct them all and there's a lot of uncertainty about what could happen.

If faced with difficulty using a credit-card or ATM, many consumers would simply write more checks. But Federal Reserve officials want to make sure teller windows are well-supplied with cash just in case people decide they want it.

``We attempted to look at normal spending patterns for households and we estimated the amount of currency people might need for necessities, groceries and things like that, for a period of two weeks,'' Farnsworth said Wednesday. ``We assume people are not going to take out cash to buy automobiles.''

The Federal Reserve's plan means the Treasury Department's Bureau of Engraving and Printing will print more currency over the next year and less currency than usual in the year after that.

``It just means we're printing the currency earlier than we normally would,'' Farnsworth said.

Lou Marcoccio, research director for the Gartner Group, a Stamford, Conn., consulting firm, advised clients that the Fed's plan should provide ``a more than comfortable safety margin'' of cash.

``If withdrawals are made by the public they are expected to be relatively small cash amounts where bank customers hope to cover critical expenses over a short millennium rollover period,'' he said.

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-- Pastor Chris (, August 20, 1998.

I have a hypothesis that every country operating a fractional-reserve banking system must have a warehouse somewhere filled with pre-printed paper that isn't yet money (different design to the in-circulation paper, and probably *much* higher demininations).

This would be declared to be money and issued if a systematic run on the banks were to occur. Knowledge of this would not be widespread, both because of security considerations and because the public is not encouraged to try to understand fractional-reserve banking!

If I'm wrong, then the authorities are more stupid than I think. This is of course possible.

-- Nigel Arnot (, August 24, 1998.

After reading about the Fed's stored cash in case of bank runs I went to the bank to cash a paycheck ("small bills please"). I have been checking the bills for the last few weeks and have noticed that ALL bills are 1995 printing (or maybe later). But last Friday, 8/21, the date of huge stock market fluctuations by the way, I received a whole bunch of OLD BILLS - mostly from 1981 - of all denominations, ones, fives and tens (I don't get anything larger). So considering that bills generally are recycled in a couple of years, WHY, OH WHY am I suddenly receiving 17 year old bills??? Could it be that the treasury is ALREADY having trouble meeting the demands for "cash in hand"????

-- Linda Wymore (, August 25, 1998.

I don't think this is unusual. I ran across a bill from 1936 today.

-- Dave (, August 25, 1998.

I've noticed getting in inordinate amount of 1998 coinage in change lately.

-- Nathan Hale (, August 25, 1998.

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