I found this on the Gary (Scary?) North site:

http://www.garynorth.com/y2k/detail_.cfm/4882

I knew the banks were shakey, but WOW! My opinion is that Y2K computer problems, in a vaccuum, would be manageable. But with so many dominoes ready to fall (banks, war, politics), I don't know...

-- Anonymous99 (Anonymous99@Anonymous99.xxx), June 02, 1999

Answers

I think the Fed, Bank of Canada and Bank of England have this problem (run on banks, causing fall of fractional reserve system) beaten. What I question is the cost of the cure.

They have stated that they have printed enough dollars to satisfy the demand. They are prepared to loan them to COMPLIANT banks. They have stated that they can print as much as needed. They are auditing and ready to force the closure of noncompliant banks. They are extending the bank settlement time at the turn of the millenium (from 3 to 30 days as I recall).

This should allow people to withdraw their thousand dollar bills (which cost the fed $.02 to create), look around after 2000 and see that their bank (in general) is working (if we have power), question why they have all that money in their house where it can get stolen, and put it back in the bank where it is federally insured.

My questions are:

1. What does doubling the money supply do to inflation?

2. Is inflation a good thing around Y2K (maybe so)?

3. What is the effect on the dollar of all this market manipulation by the government (Plunge Protection Team) when Y2K hits.

4. What is the outcome of this manipulation in the price of gold?

5. What is the outcome of this "war" between the Dollar and the Euro to be the world reserve currency?

Professional Risk Managers always talk about lack of transparency raising risk levels. I even have read Greenspan, Rubin and Clinton talk about the importance of transparency on separate occasions. Well, We sure as hell don't have transparency here.

-- ng (cantprovidemail@none.com), June 02, 1999.

The ONLY way that "they" have the bank run problem beaten is if Joe Sixpack continues to sleep and not worry about Y2K. For as long as their spin about being ready for Y2K is believed, in spite of all evidence to the contrary, they will succeed.

But then comes January 1, 2000. And the emperor will be found to be wearing no clothes.

(Oh, and all those other worries that you listed are pretty good ones, too.)

-- King of Spain (madrid@aol.com), June 02, 1999.

King: What evidence to the contrary are you referencing? Please cite specific examples and links if possible.

-- newlurker (no@no.com), June 02, 1999.

They will tell you anything to prevent your recognition of the problems inherent in the systems and any actions you might take to protect yourself by getting out of the system. Of course they do not care if YOU get out or any other individual. What matters to them is if a significant number stress the system. In which case you become the enemy.

-- -. (dit@dot.dash), June 02, 1999.

When contemplating a Gary North comment on, or reference to, the banking system, it is important to keep in mind that Gary North _wants_ the banking system to fail (he's been predicting that for over a decade, and wants to see his predictions justified; also, it fits in with his desire for a societal calamity big enough to allow his co-believers to replace our present government with a theocratic one), and that he never presents anything that would justify confidence in the banking system.

Never forget that Gary North presents only the pessimistic side of this topic.

-- No Spam Please (nos_pam_please@hotmail.com), June 02, 1999.

As I've said before, you don't need to be a religious wacko like North to realize that the money, credit, and banking system of the U.S. (and the rest of the world) is a rip-off. All you have to do is open your fricking eyes. It is designed by and for the elite to maintain power over the sheeple (most of you, in a politico-economic sense).
You can play with a filled balloon. But play too rough, or it hits a rough patch -- BOOM!!

-- A (A@AisA.com), June 02, 1999.

Economics 1A: Rapid expansion of the money supply causes inflation (too much money chasing limited goods and services). This, in turn, often causes governments to print more money, which causes higher prices, which in turn creates a liquidity crisis (not enough currency), causing the government to print more money...

Maintaining a tight rein on the money supply is one major service that the Fed has done (or attempted) for the US economy. This is (also) done in ways other than reserve requirements. The key question (and one that I'm sure is being asked by the Fed Open Market Committee is when they provide extraordinary liquidity over Y2K, can they get the djin back in the bottle? If the public retains trust in our banking system, quite likely, yes. If not, probably no.

What no one seems to be addressing is that the "liquidity solution" being employed by the Fed is also being employed by central banks throughout the world. Even if the US depositors retain trust in our system, there is a likelihood that other countries may not retain that trust. Economic collapse could occur in a number of countries, then spread... Probable depression in such a scenario.

-- Mad Monk (madmonk@hawaiian.net), June 02, 1999.

King,

When the emporer is without clothes, do you think any mudwrestling will come up?

-- R. Wright (blaklodg@hotmail.com), June 03, 1999.

The exchange of checking account money for paper cash money is not an addition to the money supply. In other words, if you give the bank a check for cash, you have say $100 more paper money and there is $100 less in the checking account. This is a wash. The problem occurs if too many people do this, paper cash runs short, the amount on deposit is reduced and the banks are therefore able to lend less money, interest rates could rise and there could be an inadequate amount of cash for businesses to make change etc.

-- Tom (notstupid@wow.gom), June 03, 1999.