How to spot a currency crisis.greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
How to spot a currency crisis? Treasury bills trading at wacky prices? Banks calling in loans? Long lines at the ATM? Cash withdrawl limits?
How about really worn out paper bills. ones, fives, ten's and twenties.
Well, sorry It's the only idea i've been able to come up with over the last few months. And it does seem that the supply of crisp new bills has been rather scarce lately. Maybe I'm too far from the local reserve bank.
This also presumes that people are stashing their crisper currency and not the really ratty stuff AND that the old bills are being allowed to circulate longer and to greater deterioration.
I think twenties cant go too far or they'll jam the ATM's.
Any depression era memories? During hyperinflation you have just the opposite problem, crisp (worthless) currency galore.
Anybody think JQ Public will be lining up later this year to get his regulation ration of limp rag U$ "Green Stamps"? Or maybe a sudden flood of crisp $100's?
As for the 2/3d of americans who will "withdraw extra cash" later this year, if they keep to around $250 per household this is only about 10% of the total currency supply or about $25 bil. You'd never notice it.
At what fraction of Greenspan's reserves does uncle sam start putting the screws on? At what fraction does it begin to impact the day to day operation of cash intensive businesses (fast food, movies, restaurants, supermarket, farmers market, etc?) This question hasn't been discussed.
My suspicion is that as long as uncle sam has cash in reserve, he will avoid anything extreme that would arouse suspicion (such as withdrawl limits). But then, maybe this is a bad policy? (Maybe his reserves are all in $100's, uh oh.)
-- Hunchback (Quasimodo@belltower.com), May 21, 1999
With all due respect, a personal inspection of your currency is probably not enough to draw any conclusions since there is $486,291,684,565 in U.S. currency circulating worldwide. (As of February 28, 1999; U.S. Bureau of Engraving and Printing)
"The Bureau of Engraving and Printing produces 37 million notes a day with a face value of approximately $696 million." The Federal Reserve has indicated additional currency will be available to meet the potential January 1, 2000, banking needs. Of course, this is only currency, not the more inclusive "money" (M1, M2, M3).
If you are not happy with the crispness of your notes, most banks will accommodate you with an exchange. Worn out currency is routinely "retired."
-- Mr. Decker (firstname.lastname@example.org), May 21, 1999.
On the contrary, I just went to bank and go t a bunck of brand new twentys all in perfect sequential order by serial number.
-- Bill P (email@example.com), May 21, 1999.
A long line at the bank of people with wheelbarrows can also mean trouble.
-- Ben Franklin (firstname.lastname@example.org), May 21, 1999.
It would not surprise me to see a second bank run in January. Put on another printing shift.
-- Mike Lang (email@example.com), May 21, 1999.
I think we missed the point, the question is does a massive hoarding of cash by private citizens have any effect on the condition of a random note you may encounter during routine purchases?
I think not, since if the reserve system begins to see large outflows they will only differentially increase the amount of cash they put into service, as long as this is less that 100% over what they usually need for wear and tear there would be little visible difference in the quality of a random note. This is because the cash mixes around, some random selection being bleeded off into personal stashes (than the norm) and the usual ratty stuff being pulled out of circulation.
If they are doubling or quadrupling the rate of issue due to cash going out of circulation only then would might you notice. And then in that case, all notes would be hoarded and you'd notice an INCREASE in the "crispness" because substantially larger quantities of new notes are comming through the pipe but the standards for wear haven't changed. The average note is therefore "newer"
The reserve system could only handle a quadruple rate for something less than one year.
Once they run out of ammunition, then a different situation takes hold. If they start reissuing old decomissioned currency this would be noticable I think, if however they simply ran out, but the rate of cash leaving circulation into personal stashes continued, then a cash shortage would ensue, and in this case, there would also be no change in the quality of the average note.
A final point. Even if they start really pumping out cash, you cant just go by the date on the notes. Some of the notes were probably printed years ago even though they are still in mint condition. but maybe I'm wrong.
-- BigCheese (Summers@treasury.com), May 22, 1999.
Subject: How to spot a currency crisis.
SIGN IN WINDOW OF LOCAL BANK(S)
Sorry, but due to malfunctions during testing of the software we got from (insert co. name.) and the time lock system supplied by (insert co. name), and testing of the telecomunication system owned by (I.C.N.), and the recent merger aquisition from (ICN) and the lack of Postal Service today, and the collapse of the Asian, Russian, Euro, (ICountryN) stock markets, we will be closed until Monday..
PS You did prepare for some short term disruptions... DIDN'T YOU??
The US Federal Reserve is printing an extra US$50 billion worth of bank notes as a precautionary measure. The central banks of Australia and New Zealand have taken similar steps.
Bennett, who also serves on the Senate Banking Committee, said that without such actions if even a fraction of Americans took $500 out of their credit unions, the result would be "a shortfall of credit unions overall of $16 billion."
-- unspun@lright (firstname.lastname@example.org), May 22, 1999.
mikey: did they happen to say which Monday?
BigCheese: 6 months or so ago an article mentioned that the Fed had the option of delaying bill retirement, so I feel sure they will be exercising it.
The date on a bill is the series date, and each series is four years. Thats why new lookiing bills can seem to be several years old.
-- a (email@example.com), May 22, 1999.
Just one of several articles and threads reporting on this a little while back. This one came from Wired News (you'll have to search if you need, because I have cancelled since they have stopped reporting Y2K related news)
-- unspun@lright (firstname.lastname@example.org), May 22, 1999.
Actually, the series year on a Federal Reserve Note changes, not every four years, but whenever the design changes (like on the new twenties) or either the Secretary of the Treasury or the Treasurer of the United States changes (because these two signatures appear on all Federal Reserve Notes printed while they hold their respective jobs).
-- Nathan (email@example.com), May 22, 1999.
Maybe people aren't concerned enuff to save bills, but our stores are complaining about lack of change coming thru. No one is spending change. And in one day, I saw a sign in two stores saying they need pennies. I am one of those people who never spend change. If its $1.09 they get two dollar bills. All change then goes into a can. I will save over a thousand dollars in a years time and this is spent on vacation or something we want that we "don't need". However, for the past two years I have just kept it "in case". The manager of the local dollar store and I have gotten pretty friendly since I have spent so much time and money in there. She has said that she has noticed more old bills in circulation, especially $5 bills. I also keep tabs with the asst mgr of the local WinnDixie and she says that they are seeing the purchase of canned goods ratcheting up and things like tooth paste, peroxide, bandaids, etc. But paper products only with a good sale. FWIW !!
-- Taz (Tassie @aol.com), May 22, 1999.
I read in one post that the total amount of $1 bills plus US coins in circulation per household is about $37. Right now I have $2500 of these items. I know I am extreme, but I think that more and more people are holding onto dollar bills and coins. One sign of crisis will be the difficulty of making change.
It will be hard to increase production of these items. Any comments?
-- david the collector (firstname.lastname@example.org), May 22, 1999.
I do not believe that $5 bills are being either retired or printed. I haven't seen a new one in months, and the ones that I have are virtually all extremely ratty. I am also more likely to receive five $1s in change (instead of a $5 bill) than I would expect.
I have paying almost everything with $20 to break them. The good $1 bills I reserve for the soda machine, the really bad $1s I spend, and I have been keeping the rest. Same with $5 and $10, spending the ones in the worst condition and saving the rest. If the feds anticipate a shortage of cash, I would expect them to print the higher denomination bills - it's more efficient. I think the $5 bills are being "short-changed".
-- Brooks (email@example.com), May 22, 1999.
May I insert a little humor? At my bank, it seems there is always a sign!!! Never enough tellers, only 2 to be exact, a dormant drivethru window and an ATM that NEVER has cash....Last time I went in (had to no $$$ in the ATM) they felt so sorry for me they credited my account for 5.00 for me having to 'go inside'....True story, if your banks ATM has no cash, I suggest going in, raising a little cane and asking for the credit.....Worked for me....
-- consumer (firstname.lastname@example.org), May 23, 1999.