Cash Demand And Liquidity Risk Issuesgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
The Federal Reserve is increasing the value of its currency print order through September 1999 with the Bureau of Engraving & Printing, by 53% over the comparable FY 1998 period. This increase will allow the Federal Reserve to increase the value of its vault cash inventory by 33%, an increase of $50 billion by the end of September 1999.
Link : http://www.aba.com/aba/static/GR_cashY2K.htm
-- (email@example.com), May 21, 1999
Consumers are advised that the ink on this currency may not be quite dry, and any similarity between the paper used in the new bills and common newsprint, is coincidental...
-- Ben Franklin (firstname.lastname@example.org wet), May 21, 1999.
Yes, the FRB is increasing it's vault cash inventory by $50 billion this year in anticipation of increased cash demand related to consumers' concerns regarding Y2K, bringing their total up to $200 billion.
In Japan, they are printing the dollar equivalent of an additional $300 billion in %en. Do they know something the FRB doesn't know?
-- Joe Bradley (email@example.com), May 21, 1999.
Unless you have an intimate acquaintance with the Japanese people and their culture, most comparisons between Western sensibility and that of Japan are meaningless. That translates over to monetary considerations as well.
Japan is a very homogenous nation, ethnically (unlike the U.S., which prides itself, and always has, on being a 'melting pot'). Japan is the very antithesis of a 'melting pot'. Ethnic sameness is prized, and emphasized. There is a secondary Korean element in Japan, but these are second-class citizens. These are not racist statements, lest any bleeding heart 'politically correct' idiots join in; they are simply facts.
It is, therefore, not at all surprising that Japan would devote such a 'surprisingly' high yen amount to Y2k contingency planning. The Japanese are an intensely proud people. And they have taken a lot of heat for being behind the curve, as it regards getting up to speed on Y2k planning/remediation. Overcompensation is almost expected, if you understand the Japanese mindset. It's a matter of national pride.
PNG lives in Japan. But I think I understand that country better than him, though I've never been there. My grandfather started doing business with the Japanese in 1927. That commerce was interrupted by WW2, but his company was the first company in the US of A to resume commerce with Japan after VJ-Day. My father and uncle carried on that tradition until 1990.
The Japanese Ambassador to the U.S. once came to our state to survey Japanese business interests here, and my father and uncle hosted the formal reception for him, at my uncle's house. The only reception that was held for him in this state. We're connected with the Japanese, OK?
I've worked for a Japanese company directly, and speak the language to a degree.
In other words Ed, there are folks around who can tell you about Japan besides PNG, and I can also tell you I've read things that PNG has said here that are pure BS. He ain't all what he says he is. Who says that? 63 years of my family's accumulated business experience with the Japanese says that. That's who.
-- Chicken Little (firstname.lastname@example.org), May 21, 1999.
PNG lives in Japan. But I think I understand that country better than him, though I've never been there.
Chicken, With all respect but your full of chicken shit.
Go to Japan and experience the culture for yourself. You will get a big eye opener and learn more then whatever umpteen years of hennhouse familie experience ever will teach you.
-- Rickjohn (email@example.com), May 21, 1999.
Stats are the Fed are running scared - much like Kentucky fried chicken - fiat money is on it's death bed.
-- Andy (2000EOD@prodigy.net), May 21, 1999.
gad,I'm going to say it,I agree with chicken little,in that japanese culture is vastly different from the u.s.no matter how "westernized they act.I'm an asian studies major with an emphasis on philosophy.I agree that there is no comparison between american and japanese culture,we're totaly different animals.that's why japan's compliance statements are meaningless,they're given in the spirit of saving face.what we might think of as lying the japanese could dismiss as maintaining company spirit.right up to the deadline.
-- zoobie (firstname.lastname@example.org), May 21, 1999.
I've read that it's virtually impossible for a Japanese to say "NO" -- they will phrase a negative decision or reply in a way that camouflages what they're saying. Very easy for other folks to misunderstand.
-- Tom Carey (email@example.com), May 21, 1999.
For what it's worth, I refuse to believe that the Fed. will possibly run out of greenbacks. I would believe that the Fed is lying about its own currency reserves or its own plans to print currency, but I'll never believe that they'll run out.
Currency is simply too easy to produce (and yes, I've seen writing to the contrary, but get real, it's only printed paper) and the downside of allowing people to convert money from book entry to currency for a period of a few days, weeks or months does not compare with the downside of telling people they can't have their own money. Relaxing reserve ratios, etc., could cause problems for banking, but not on the scale of preventing access to currency.
If access to currency were curtailed in any way, the banking system would be in a shambles for the better part of a generation.
A bank holiday or withdrawal restrictions are not unthinkable, but the cause would not be a shortage of greenbacks.
Just my opinion. Of course, I'm not in charge.
-- Puddintame (firstname.lastname@example.org), May 21, 1999.
I don't claim to be an expert on Japanese culture, but isn't their cost of living considerably higher? I have a friend who visited HER friends there a few years ago and she couldn't believe the prices. Her travel budget was found to be very inadequate, despite the research she'd done before taking the trip.
I've also heard that Japanese tourists scoup up designer handbags in New York as though they were visiting a flea market.
I guess what I'm saying in all of this is that if we had to pay $10 for a loaf of bread versus $1 or $2, wouldn't the government expect folks to NEED more money?
-- This response is for Joe. (email@example.com), May 21, 1999.
Puddintame, I do not think that you appreciate the fact that since most of the money supply is actually electronic money in the form of bank deposits, checks, and other electronic entries, there was no need for paper cash as long as people had confidence in it. The banks would lend something like 9 times the abount deposited and the loan would be checks, checking accounts, etc. with little paper cash. Now if all of the people who borrowed money demand cash money, it does not exist and running the presses around the clock can not print the amount needed fast enough which would be in the trillions of dollars. The $50 billion of extra cash printed was based on the physical amount that could be printed. The government would have liked to be able to say that they printed an additional amount magnitudes greater that this. The paper money does not exist in adequate quanities. There have been numerous posts on this subject on the Gold Eagle and Kitco websites by eminent economists who understand the system far better than I. I would guess that Paul Volker, President Eisenhower, and other former leaders with integrity would NEVER have increased the money supply to the high levels now in existence to make the economy look good. President Bush probably lost the election because he held the money supply down to reasonable levels, and there was a recession that was ending at the end of his term. People think the economy is good. Actually the money supply (electronic not paper money) has been increased to the degree that it has to go someplace and where did it go? Into the stock market. Without capital gains, a person with $500,000 invested in the stock market could not have a decent standard of living if he was living off the income only. If the money is earning 2 per cent, this is only a $10,000 per year income. Think about it. If the market starts to crash, look out below. People will panic and sell more. Everyone will not get out in time.
-- Tom (firstname.lastname@example.org), May 21, 1999.