What % of pleople do you think will be withdrawing say $2000 or more out of the banks before Dec. 31? How many will it take to cause a run on the banks? If there are so few of us preparers out there, how can we-of-so-few-numbers cause a run on the banks? Could the powers-that-be be spinning the bank panic possibility to actually create a panic for God knows what reason? Hmm - just a thought.

-- Valkyrie (anon@please.net), April 14, 1999

Answers

See thread from earlier today:

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=000iW9

I suspect the pre-bank run is already underway. A realization that we are low on currency (assuming that is true, of course) might be all that it takes to create a bank run, and could happen fairly soon. It may not even be seen so much as a Y2K problem or a lack of confidence in the banking system, but simple supply and demand of small bills.

I don't think "we preparers" are the issue here - it takes too much effort to prepare, but very little to withdraw money (sorta like the minimal effort required to sign that insurance check). And it's not just withdrawals, it could also be small businesses holding onto deposits to make payroll in cash. Even so, expect more "enemy of the people" lectures from PDJ aimed directly at us.

I have already reached my goal of stored food. However, with 8 months to go, I suspect the pile will grow. Those trips to the wholesale club are too therapeutic to pass up! Likewise, IMO, the sooner people start to withdraw money, the greater the final withdrawal amounts are likely to be. So it isn't necessary to start out with a goal of $2K - that might simply develop over time.

-- Brooks (brooksbie@hotmail.com), April 14, 1999.

IF I understand correctly, banks are required to maintain 10% in reserve (the rest is loaned/invested). However, due to games in creative instruments, the 10% is actually only 4% in a lot of cases.

If true, USA citizens need only pull as little as 4% of their money out of the bank to "break" the bank.

-- Anonymous99 (Anonymous99@Anonymous99.xxx), April 14, 1999.

The Mrs. and I have already gone through the "de-banking" stage.

Mr. K

-- Mr. Kennedy (already@this.stage), April 14, 1999.

Wellll - 38% nominally don't believe anything Clinton says at - another 32% is very skeptical, mistrusting him in many issues.

Some of these two groups are included in the 24% of the general population that claim they will withdraw "some" cash and are making specific credible efforts to prepare for y2K disruptions.

Most of the 30% that absolutely "loves" and "adores" Clinton will likely NOT prepare, and will believe everything said - up to the point when they see what the rest of the "heard" is doing. I don't (presonally) these 30% with any drive, inititive or effort past their TV screens and their soap operas, so assume only 10% of these 30% (3% overall) will respond before it is "too late."

Therefore, I estiamte - based on nothing but sheer guesses - that 70% + 3% will withdraw at least some (200.00 -500.00 of their monthly "checking account" balances. Part these will pull less that 100.00, some (maybe the same number will pull more, and also get some part of their "savings".

A few - who really don't understand what's going on and who really do "panic" - will pull money from the stock market (after it begins to go down because of the day-traders) - and fail to move it to the relative "safety" of bonds or other investments temporarily. These "fools" will be hurt badly = tax-wise and investment-wise.

The best choice appears to shift investment money before this drop happens, then purchase stocks (go back in the market) before the rest of the people try to go back in.

In other words in this Y2K-affect potential stock market, try to "time" the market (bad advice under usual circumstances) - and sell what they're buying when they're desperately buying, and buy when they're selling what they're desperately selling..

-- Robert A Cook, PE (Kennesaw, GA) (Cook.R@csaatl.com), April 14, 1999.

Interesting question. Thanks for posting it. I've seen the surveys that say x% (where x is 15-35) of people plan on taking out some or all of their money before Dec 31.

I think the operative word is *plan*. I think for a lot of those folks the priority for taking money out (as a Y2K precautionary measure) is way down the list of things that *have* to get done this week/month. As someone once said, life is what happens while you are making plans. Accordingly, as we move on in 1999 and (I'm making assumptions here) we saw no major public problems at the trigger dates (July 1, GPS rollover, Sept 9, Oct 1 etc) and more Y2K "happy" news comes out then it could be that the "withdraw cash for Y2K" to- do item still stays towards the end of the to-do list.

If we make it to November without a big bank run then I think the chance of one happening in December is limited. By November we will know a great deal more about electricity, telcos, FAA, gov't in general and the banks specifically.

I write as someone who lives in Canada, and also knows something about the UK banking sector (I lived in London for 6 years and still maintain bank accounts in the UK). In both Canada and the UK the vast majority of retail banking is performed by 5 or 6 HUGE clearing banks. In theory this should make sector-wide Y2K remediation easier and thus inspire more confidence amongst consumers. The situation in the US is different in that you have a large number of banks, many of which are quite small. I stand to be corrected, but haven't most, if not all, bank runs in the US happened at the smaller instititions? If a pre 2000 Y2K bank run does occur I would bet that it is likely to occur at a small bank whose customers believe its systems will not be remediated in time.

Johnny Canuck

-- (nospam@eh.com), April 14, 1999.

You may find this interesting. It is now somewhat dated, but the ratios have not changed that much. The chart image is no longer available. It will take only a very small percentage to cause a very big problem.

http://www.y2ksupply.com/bankchart.htm

-- Rob Michaels (sonofdust@com.net), April 14, 1999.

Something I read recently raised a question I had not really considered. What percentage of companies, maybe even larger ones, will withdraw cash to meet payrolls. I guess that would be a PR thing. Company ABC says,"no problem, we have your money, IN CASH, right here.

-- Wondering (about this@unsure.net), April 14, 1999.

Brooks (reading my mind) said:

"I have already reached my goal of stored food. However, with 8 months to go, I suspect the pile will grow. Those trips to the wholesale club are too therapeutic to pass up!"

How right you are! I have never been one to make purchases in order to salve a foul mood. Until now. I just came back from a trip to Big Lots, Dollar Tree & Family Dollar. Yahoo!

Now back to the original intent of the thread...

I know of no one who will be withdrawing that kinda money. Of course, $2000 is a great deal of money in my circle of acquaintences. Furthermore, I wouldn't ask such an invasive question, & who would reveal such plans anyway?

I just can't visualize a bank run in the U.S. The sheeple are completely unaware of the 'confidence game' known to some as late 20th century global economics. What could break the unquestioning faith of the masses in this system? Economic meltdown, perhaps? This is not a prediction, mind you, just speculation on my part.

-- Bingo1 (howe9@pop.shentel.net), April 14, 1999.

Wondering --- You've hit the dirty secret of the whole thing. Hard to quantify but "bank" on it. I know our business is planning to have enough on hand to pay staff for AT LEAST January.

Families: 30% nothing; 60%, $500; 5%, $1,000; 3%, $2,000; 2% > $5,000

I think if I'm right and someone does the math, 2 + 2 = bank holidays BEFORE 1/1/2000, say, December 10. Merry Christmas.

-- BigDog (BigDog@duffer.com), April 14, 1999.

No more wondering, weighing, pondering bank $$ withdrawal -- the IRS just did it for us! Happy Ides of April. The Revenue Guillotine slash beheaded our piddly account.

Won't be making deposits this year though. A persistent Happy Face optimist still occupies a large corner of our subconscious and roots for continuation next year of Life As We Know It. No problems in 2000, deposits resume. Wish, wish, wish, upon a lucky star ...

xxxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxx

-- Ashton & Leska in Cascadia (allaha@earthlink.net), April 14, 1999.

I did it!

The bank told me that they couldn't change an automatic debit and that I was overdrawn. So I said I guess I will have to cash in my CD's then.(yeah,right,like they believed I couldn't pay a $75 bill without cashing in my CD's !). But she never blinked an eye just asked how I wanted it and I said in cash. They went to the vault, came back, counted out the money and said "you all be careful now".

One bank down and one to go.

-- sue (deco100@aol.com), April 14, 1999.

One aspect we haven't discussed yet. The link above ( http://www.y2ksupply.com/bankchart.htm ) mentioned that most US currency is held outside of the US... I read an article the other day talking about some Latin American countries are thinking of using the US dollar as their currency. Russians use US currency (cash) for many domestic transactions.

In other words, the market for US currency is bigger outside the US than inside (5.75 billion vs .275 billion people). Even if the US government persuedes its citizens not to hoard currency, a cash run could still start outside the US borders.

-- King Kash (kash@stash.it), April 14, 1999.

The bank runs will/already have started in Japan; at least to the extent that Jap housewives who control the money have put millions of yen of their money (per household) into dollars in Chase, and other banks for starters. When the conditions worsen here, the run will occur in Japan to get out of dollars, WHILE YOUR SLEEPING, and the FIRST thing the INSOLVENT JAP BANKS will do is CASH US TREASURIES as a QUICK FIX. Everything being electronic world wide, ALL of Asis and Europe will do the same before you turn on the morning news to find out the BIGGEST DEBTOR NATION in the world not only has NO MORE LENDERS, but that we are ALL BROKE, INCLUDING THE GOVERNMENT that you expect to give you at least the $2.47 per every $100 they owe you from your "former" bank account. Have you got Melatonin ??? YOUR GOING TO NEED IT !!! Eagle

-- A. Eagle (A999Eagle@circling.com), April 14, 1999.

Well, I'm only takin' out a little ol' 1% in cash for a few months of bills, of course my net worth is around $90 Billion so I guess I just clobbered 90 MILLION households...heh, heh, heh...I gots mine!

Bill

-- Billy Gates (gimme@mine.now), April 14, 1999.

I say 65% will try, but the money will be long gone. BTW, the banks in Japan are all about to go belly up.

-- SCOTTY (BLehman202@aol.com), April 14, 1999.

Hey, A. Eagle...

Is there a site where these things are discussed?

-- PNG (png@gol.com), April 14, 1999.

PIGGY

http://www.garynorth.com/y2k/detail_.cfm/3570

There are about 9 billion $1 bills in circulation and about 3 -5 $billion worth of coins. Because $1 bills are time consuming to count and coins are heavy to transport, most of the $1s and coins are in circulation and there are only small vault reserves.

[snipola].

Unofficially estimated, $1 bill reserves may be about 5% of $1 circulation and coin reserves about 2% of coin circulation. At some point, the lack of coin will be noticed. First by the Fed who gets data from all the Banks, then by Banks, who notice dwindling vault reserves, then by vendors (small businesses) who are told by the banks to "conserve" coin requirements, then by "customers" who are asked if they have the change. It is difficult to say at what point it would begin to be a problem. Most likely, if 50% of $1s and coins were in Piggy Banks this would be a serious problem.

With 250 million Americans, this translates to about $35 in $1 bills and about $20 in coins. This means that there is really only about $50 per person in the smallest form of currency. But without the ability to make change easily, the value of all the larger bills is put into question. At least a question of convenience. This also means that once 10% of the public had $100 in a Piggy the system of small change might be in trouble. The moral of this story is that coin saving (which is certainly going on all the time and is definitely increasing as people get ready for Y2K) will most likely lock up the small change system long before it gets to the "mainstream".

-- notme (hmmmmmm@notme.com), April 15, 1999.

"FRB In Panic of Y2K"

Early this January I posted a message to the Gold Forum about the FRB increasing by 30% the amount of cash available to the public in anticipation of the looming Millennial Menace. At that time I felt the Fed grossly underestimated the Y2K danger - and suggested the Fed would subsequently be back several times this year to further expand liquidity in the hands of the general public. Low and behold the Fed announced last week another draconian increase in Y2K cash liquidity.

The recent FRB announcement clearly shows beyond a shadow of doubt the Fed is not doing its homework in regard the potential ramifications of the Millennial Menace, and therefore grossly underestimates its danger. On the other hand the Fed's recently embarrassing and seemingly mis-calculation may be interpreted as the U.S. Central Bank purposely misleading the public. Read on, and you decide!

Gold Forum Posting Week of January 11, 1999

FRB Foresees A Run On Cash Come The Millennium Bug 31 Dec 1999:

The following was announced on the nationally syndicated TV program "MONEYLINE" on Friday, 20 November 1998 -----

"In anticipation of a cash shortage related to the forth-coming event called the Y2K Computer Bug, the Federal Reserve Board has taken the precaution to ensure there will be enough ready cash on hand in the banking system. Therefore, the FRB will add an additional $50 BILLION into the system -- representing about 30% more cash liquidity than is currently in the system. This is equivalent to approximately $500 per US household."

The prophetic announcement was made without any particular fanfare just another 'biz' news item. Frankly, I am flabbergasted by a number of thoughts which leap to mind.

Firstly, the US government officially and publicly recognizes the existence of the MILLENNIUM MENACE. Secondly, the government's remedy is far TOO insufficient in magnitude and scope. Specifically, the amount of ready cash is far TOO little. And finally, cash alone definitely will NOT protect each family from the potential dangers of the Y2K Bug: namely, the additional NEED FOR FOOD AND PHYSICAL PROTECTION.

Think of it, $500 per US family household this would be funny if it were not so pathetically dangerous. An average U.S. household has four members. Now how many days can an average U.S. family survive with a measly 500 bucks? Maybe 10 to 14 at most under normal conditions. This is pittance.

It seems eminently clear and logical that any half-way intelligent household head will want at least $5,000 to $10,000 on hand, AND IN CASH WHEN NEW YEAR'S EVE 1999 CRASHES AROUND US. Cautiously prudent household heads will be DEAD SOBER WHEN THE CLOCK CHIMES THE 12 th GONG.

Attention Mr. Alan Greenspan, $500 per household AIN'T GOING TO CUT THE MUSTARD!!! You damn well know that!!!

I will go on record to predict the illustrious US government will periodically make a series of escalating announcements during the next 13 months to the effect, " in anticipation of the growing concern regarding the Y2K Bug, the FRB has decided to AGAIN increase the ready cash on hand in the banking system by an accumulated total of $60 BILLION. by an accumulated total of $120 BILLION. by an accumulated total of $240 BILLION etc etc.. "

It's now 15 January 2000: "The FRB has just announced that dire liquidity circumstances throughout the US and the rest of the world demand an additional $500 BILLION in ready cash be added to the US banking system to alleviate the grave situation.

Meanwhile, one can only imagine what might be the nightmarish problems of food-shortages and law-enforcement. Remember, recent Internet reports mention the UK is ALREADY drawing up plans of implementing Martial Law in the event the Y2K SITUATION gets out of hand.

$500 per U.S. household is TOO BLOODY LOW!!!

Come 31 December 1999, cautiously prudent household heads will be DEAD SOBER WHEN THE CLOCK CHIMES MID-NIGHT.

Fast-forward three months to Early April

Following is a verbatim copy of an April 8, 1999 Internet article by Reuters journalist Isabelle Clary.

"Fed ups available cash by $200 billion for Y2K"

"NEW YORK, April 8 (Reuters) - The Federal Reserve will provide U.S. banks with an additional $200 billion in cash to cover any surge of year-end withdrawals by customers worried about the year 2000 computer problem, Chicago Fed President Michael Moskow said this week.

``As a precaution, the Fed will increase the currency in circulation and in our vaults to about $700 billion by late 1999,'' Moskow said in text prepared for an economic lecture at Middlebury College, in Middlebury, Vermont.

``The Fed has acted to ensure that more than sufficient cash will be available throughout 1999 and 2000,'' Moskow added.

Currency in circulation is the cash Americans carry in their wallets for daily spending and that currently amounts to about $518 billion, according to the latest Fed's data.

The additional $200-billion cash will boost the volume of U.S. dollars available for or in circulation to about $700 billion. The Fed also keeps cash in its vaults in the event of a sudden demand for the U.S. currency.

The Fed is increasing currency in circulation as the year 2000 nears to avoid panic runs on banks if people fear computer programs will mistake the years 1900 and 2000 -- the ``Y2K'' or ``millennium bug'' problem -- and erase existing balances on their bank accounts.

``I don't know whether people will be wondering whether their ATMs (automated teller machine) will work or not and withdraw a lot of money before December 31,'' said deputy chief economist Carol Stone at Nomura Securities International.

``But it's prudent for the Fed to prepare for this, by making available to banks extra hard cash in case people do feel that way,'' Stone added. ``After all, some people think the world will end on January 1, 2000, and others may think their money will disappear.''

The Fed is the government agency that distributes to commercial banks the dollar notes and coins they need to meet their customers' demand.

Moskow stressed the importance for U.S. banks and financial markets to eliminate the millennium bug from their computer programs and said the Fed's own ``most important internal systems are ready for Y2K.''

``The Federal Reserve has a vast experience in handling disruptions such as national disasters,'' Moskow added while pointing out that the vast majority of U.S. banks and thrifts or 7,600 institutions are also in compliance with the program."

Based on the Fed's TWO announcements, one may tabulate the cash liquidity provided to each American family.

Early 1998 Available cash per US family = $375 Liquidity added $0

Nov 1998 Available cash per US family = $500 Liquidity added $50B

April 1999 Available cash per US family = $1000 Liquidity added $200B

Dec 1999 Available cash per US family = $1,750 Liquidity added $300B

All the above is indicative of the Fed's growing panic regarding the potential impact of the Y2K Bug. Therefore, we should all prepare our family's readiness regarding available cash needs, food and water supplies BEFORE ALL BECOME TOO SCARCE.

U.S Post Office and Y2K COUNTDOWN

Please take very careful note of the following as it causes grave concern about what the U.S. government's real thoughts might be. Last week I went to the post office in a MAJOR U.S. city to mail my income tax returns. While in line my attention was arrested by a neon- lighted sign high on the wall behind the counter of the U.S. post office. Its very large letters simply said: "Time left before Y2K Day." Below this were the neon-lighted number of Months, Days, Minutes and Seconds. For obvious reasons the Months and Days numbers did NOT change, and the Minutes only after each 60 second period. HOWEVER, the Seconds number was rolling like hell! It was nerve wracking to watch. In fact it was anxiety building.

I truly wonder why an agency of the U.S. Federal Government would put up an animated neon-lighted sign to register the Y2K COUNTDOWN displayed in a manner, calculated to generate anxiety and apprehension about the Y2K Bug problem.

I leave you with just one thought provoking question: What do you think will happen to the stock market as we close in on New Year's Eve???!!!

H. Teetmyer

Link at

http://www.greenspun.com/bboard/q-and-a-post-new.tcl?topic=TimeBomb% 202000%20%28Y2000%29

-- Andy (2000EOD@prodigy.net), April 15, 1999.

Big Dog said: Families: 30% nothing; 60%, $500; 5%, $1,000; 3%, $2,000; 2% > $5,000

Based on a figure of 120 million families in U.S. (with each family unit consisting of 2.3 people, equaling a population of 275 million), and based on a currency in circulation figure of $700 billion, of which perhaps two-thirds is outside the U.S., I figure that leaves $233 billion in the U.S., or $1941 per family. But divided along BigDog's forecast gives: 30% of families $0

60% or 72 mill. families @$500, $36 billion

5% or 6 mill. families @ $1000, $6 billion

3% or 3.6 mill families @ $2000, $7.2 billion

2% or 2.4 mill. families @ $5000, $12 billion

Totaling $61 billion, leaving $172 billion extra for those families in the last category wanting to take out more than $5,000, and for businesses to use. Comments?

-- (argh@argh.com), April 15, 1999.

They may be figuring it that way.....

Doesn't seem quite as ominous after you "bell curve it" - good.

Bank holiday - if needed at all - not until AFTER Christmas. If it were before Christmas, all h**l would break loose as merchants complained about shoppers "stopping" their gift-buying.

But the will be no news between 12/25 and 01/10 that is not Y2K related, hence, many many more people (with time on their hands) available to go the bank and "get some cash" - " .. just in case......."

-- Robert A Cook, PE (Kennesaw, GA) (Cook.R@csaatl.com), April 15, 1999.