To the usual suspects: WHAT WILL BE THE RESULT.....greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
It is obvious that the Fed is printing huge additional amounts of currency to 1) supply funds to the banks for the additional cash needed at present for "the preparers", and 2) to anticipate potential demand for later this year.
I would be interested in what your opinions are with respect to what all this additional cash in circulation will eventually create? I know that for the present at least, there is the removal from circulation by the "hoarders" of some indeterminent amount of "new" cash that is being printed. This is expected (feared) to increase as the end of the year approaches, when either there will be enough to satisfy whatever demand exists or the Gov will have to act to ensure stability. My question has more to do with early in 2000. Let us assume that there is only a mild "bump in the road." When that becomes the realization, where will all this newly suppled cash go and what will be the result? The accepted definition of inflation is a growth in the supply of money (creating addional demand) in relation to a relatively stable supply in goods? Is this likely?
In addition: The industries that have been realizing record sales will see demand for their products virtually disappear! How will they and their employees survive?
-- Dave Walden (firstname.lastname@example.org), May 01, 1999
If there is just a "minor inconvenience" instead of a major disruption, the cash would be sucked back in by the banks and FR, as soon as people would use again debit, credit cards, checks and electronic transfers.
> The industries that have been realizing record sales will see demand > for their products virtually disappear! How will they and their > employees survive?
I think that they do not have to worry that much. I have a feeling they still will be in business well into 2000. Afterwards, they may return to whatever they were involved in before. It is more likely that a lot of businesses will disappear, from small to big ones. On the other hand, new opportunities will appear to fill the gap left by the change in trade practices, especially on the int'l trade scene.
But that is just an opinion. Hard to tell how things will enfold. It would be nice to assume a position of an unparticipating observer. But that's hardly practical. :-)
-- lgj (email@example.com), May 01, 1999.
Maybe I'm reading you wrong, but you appear to be laboring under a few misconceptions.
First, the extra cash being printed cannot increase the money supply. It would be used to *replace* money in demand deposits. This only shuffles the *form* of money around a bit, but doesn't increase it at all.
Second, even if this cash were to be given away (dropped from black helicopters), there isn't enough to make a dent in the current money supply anyway.
Third, printing up the extra cash is a contingency plan. It is being done just in case. There is no guarantee that it will be necessary to use it, and some real indications that it won't be. Since greenbacks have a fairly short lifespan anyway (a year or two), all it means is that they're accelerating a normal process a little. Just like us buying extra food -- we'll eat it sooner or later anyway.
-- Flint (firstname.lastname@example.org), May 01, 1999.
1. They can not PRINT ENOUGH CASH! 2. If a company is being run correctly, they have not added alot of overhead to deal with y2k. If they have, they are SUCKERRRRRRRRRRRRS. There is a drop dead point here.
-- SCOTTY (BLehman202@aol.com), May 01, 1999.
...don't you realize, THE CODE IS BROKEN, IT CAN"T BE FIXED - THE SKY IS FALLING, HEAD TO FOR THE HILLS - NWO - MARTIAL LAW - UN TROOPS - BLACK HELICOPTERS - oops, sorry, thought I was someone else for a minute...
-- Y2K Pro (email@example.com), May 01, 1999.
hey y2kpro you forgot... TAKE ALL OF YOUR CASH OUT OF THE BANK!
-- zoobie (firstname.lastname@example.org), May 01, 1999.
OR WON'T YOUR EMPLOYER LET YOU SAY THAT?
-- ZOOBIE (ZOOBIE@ZOOB.ZAB), May 01, 1999.
you also forgot "Planes will not fall from the sky"
-- Bob P (email@example.com), May 01, 1999.
For me and hubby, the way we have it figured is that we will go back into the stock market after we see who survives and who doesn't. If its TEOWAKI we might pick up some nice property for a greatly reduced price. (I might even be able to get that little red truck....put it up on blocks and plant geraniums in it!!) We were heavily into mutual funds and I have kept the portfolio going on AOL just so I would know whether to laff or slit my throat. We sold out in July of 98 and we are ahead of where we would have been had we left it in there. We did choose to leave two stocks alone. One has gone down by 50% and the other has gone up even more. Go figure!! Both are medical.
Don't worry about money if you have enuff beans!!
-- Taz (Tassie @aol.com), May 01, 1999.
Flint's post is accuate. Demand deposits are already included in the calculation of M1. Most individuals who want currency (rather than checks) will simply draw down on checking or savings accounts. This does not increase the money supply or overall liquidity. If large number of individuals (or firms) began liquidating assets for currency, that would be a different matter.
-- Mr. Decker (firstname.lastname@example.org), May 01, 1999.
Mr. Decker, I believe that we may be missing one point. When a dollar is held physically by an individual, it is worth one dollar. When that selfsame dollar is held electronically in a demand deposit by a bank or CU, it becomes a basis for loans, investments, bonds, stock purchases etc. By virtue of the fractional reserve system, that dollar is magnified exponentially throughout our monetary reserve. What happens if these dollars are not available to the banks or credit unions for....oh, say about three months or so. Will the decrease in cash flow be enough to trigger the 'call' at the Federal level since the local bank could no longer meet the fractional reserve requirements? It has been said that a dollar in the bank expands the volume of dollars available through credit extension to about the level of 1/55. (This came from a local banker--do't know about the validity of that statement). Your thoughts please.
-- Lobo (email@example.com), May 02, 1999.
Who said the sky was falling? I must have missed that one in the archives. Could you please point me to that thread?
-- Dian (firstname.lastname@example.org), May 02, 1999.
y2k pro, why is it you always seem to fade out of the conversation when the fraudulent nature of fractional reserve banking is discussed? That is where you could be productive by taking the other side of the debate instead gnat like Thus spake zoob
-- zoobie (email@example.com), May 02, 1999.
THANK YOU LOBO: You asked my question better than I. I hope Mr. Decker responds......
-- Dave Walden (firstname.lastname@example.org), May 02, 1999.
Oy, everybody likes the fractional reserve system when it is time to buy a house or take out a business loan. (laughter)
The Federal Reserve will not "crash" the system by enforcing calls on reserve ratios in a time of crisis. The Fed's job is to keep the system intact. The government will step in and regulate (to the point of nationalizing) the financial services sector. There are a huge number of regulatory tools they can use to preserve the system. This includes defining "legal tender," which might be expanded to include qualified personal checks, cashier's checks and money orders. Legal tender, by the way, "pays" the creditor whether the creditor chooses to accept it or not.
Unless someone has bills that are not due for three months, currency will not stay out of circulation for long. The heavily leveraged American consumer will inject currency into the system, even while withdrawing funds. The flow of checks, etc. will allow a large degree of liquidity. In short, there is too much debt that must be serviced to allow Americans to "hold" currency for long.
-- Mr. Decker (email@example.com), May 03, 1999.