Your bank has only a little cash in it. Whatever you've deposited has been loaned out. You have been promised that you can draw out all of your money at any time. The banker assumes that you won't do this, and if you do, some other depositor will put in about as much money.

Sometime between now and June, 2000 -- probably in July, 1999 -- this assumption will die, all over the world. When depositors see that their money may disappear in the scrambling of the banks' computers, they will go down and demand payment in cash. On that day, the mother of all bank runs will begin. It will spread to every bank on earth.

That day will be written up in history textbooks for the next thousand years, minimum. It will mark the end of an experiment in central banking that began in 1694 with the founding of the Bank of England.

The run may not start in the United States. It could well start in Japan. Japanese housewives control the pool of investment money in Japan. If they think their families' capital is at risk, they will very politely go down and get cash. Japanese banks use U.S.-built mainframe computers with the Millennium Bug built in.

The banking system provides us with our means of payment. We don't use gold and silver coins any more to buy and sell. We use credit instruments. These refer back to entries in computers. But what if those entries were increasingly incorrect? We could see bank runs as people convert to cash. That would call the entire banking system into question. Interest rates would get astronomical in any move to cash. Banks would have to offer high rates to lure back depositors. In a worldwide move to cash, the word "recession" would not do justice to the economic effects.

Small, local banks keep their overnight deposits in the large money center banks. So, if the big banks go down, so will the small ones. The banking system is a system. Distrust of the big banks, from New York to Japan, will spread to all the others. No bank will be immune.

Bank runs could destroy the existing means of payment. The inverted pyramid of bank credit could topple. If the means of payment breaks down, the division of labor breaks down. This would move us from the economy of 2000 to 1900 -- just as mainframe computers will be reading 2000! The huge population increase of the 20th century would be threatened with reversal. The division of labor has made this increase possible. Life in a large city would become very difficult. Riots would be likely.

It's unthinkable. But if the banks really do go down, it could happen. What will we use for money in the year 2000 if they do go under?

But is the banking system really this vulnerable? Yes. Will anyone in authority admit this? Are you kidding? Do most people believe there's a problem? Not in 1997. Maybe they won't in 1998. In 1999, it will be widely believed. In 1999 or 2000, it will come true. The widespread belief that the banks could go down will bring them down.

What can the world's central banks do to stem the panic? First, they can get their governments to limit cash withdrawals by law. Then they can print paper money. If they do either or both, this will end men's faith in the banking system and the capital markets based on it. Capital markets will collapse in a wave of selling, while consumer goods prices denominated in paper money will soar.

We will see a breakdown in money payments. The social division of labor will collapse as a result. Unemployment will soar to levels never seen in the Great Depression. Computer-denominated wealth will disappear. There will be no giant sucking sound, as Ross Perot has put it. There will be the sound of wailing and gnashing of teeth.

All modern governments rest on banks. Without the banks, tax collection stops. The national tax collectors cannot come and take a percentage of your garden. Governments will not be able to pay money out or take money in. Banks are the heart of the tax and payments system, and fractional reserve banking as a system will not survive the year 2000.

The end of the fractional reserve banking system and the nation state is imminent. Plan ahead.

Of course, this sounds crackpotty today. So does the idea that not putting "19" or "20" in a century slot could shut down a computer. But it can. It will.

Think about it. How will you get paid in the year 2000? I am making my personal plans on this assumption: I won't be paid.

When the computers see 00, they will think it's 1900. Within a few months after the rollover, economically speaking, it may be.

(Other categories: "Stock Market," "Government," "Domino Effect.")

Updated -	Subject
20-Mar-97	America's Two Largest Banks: How Vulnerable?
05-May-97	New York FED Warns Banks: Repaired and Tested by Dec. 1998
17-May-97	Credit Cards: 00 Date Cards Rejected (Expired)
17-May-97	The European Banks' Biggest Threat
17-May-97	Regulators Are Quietly Beginning to Panic
17-May-97	The Banks' Enormous Task Outlined by the FED
17-May-97	The Magnitude of the Repair Task: Step One
20-May-97	Why the Banks Will Fail: Data Corruption vs. Lock-Out
21-May-97	When the Banks' Clocks Fail: 22 Aug. 1999
29-May-97	State Banks: Almost Nothing Has Been Done
05-Jun-97	European Banks: The Euro vs. Y2K => Breakdown
26-Jun-97	Euro Currency vs. Y2K Repair: Programmer Shortage
26-Jun-97	The Euro Conversion: Another $100 Billion in Costs
09-Jul-97	Why Your Bank's Math Won't Add Up in 2000
11-Jul-97	At Least 90% of Banks/Securities Firms Are Noncompliant
12-Jul-97	Compliant Banks [Ha!] Dare Not Absorb Noncompliant Ones
15-Jul-97	Banker Tells Senators: Everything Is At Risk and Late
15-Jul-97	"Optimistic" Lawyer Describes the Horrfying Risks
16-Jul-97	Senator D'Amato Spells Out the Risks for the Public
21-Jul-97	A Terrifying Task, Says Banker
21-Jul-97	Fedwire: $220 Trillion a Year Passes Through It
28-Jul-97	Japanese Banks: Just Getting Started
05-Aug-97	The Federal Reserve: Way Behind
06-Aug-97	Updated PC Software Will Solve the FED's Problem (How?)
06-Aug-97	FED Announces: Only 98% of the Job to Go!
06-Aug-97	Sorry: No Warranty Available, Says the Fed
06-Aug-97	Bank Vaults: Another Fine Mess!
06-Aug-97	The FED's Contingency Plan: Print Money!
06-Aug-97	All Must Be Compliant, Or Else None Is Safe
06-Aug-97	Six Major Internal Risks to Every Bank
06-Aug-97	Three Major External Risks to Every Bank
06-Aug-97	Noncompliant Borrowers: Down Go the Banks
06-Aug-97	Credit Unions: Software Vendors Will Save Them!
06-Aug-97	S&L's: Maybe 97% to Go, but Maybe More
06-Aug-97	Why Y2K Is Like VD, Only Worse
06-Aug-97	A Gigantic Confidence Game Is About to End
06-Aug-97	Medium Size Banks Are Woefully Unprepared
06-Aug-97	The FED Has Barely Begun Its Own Repair, Admits FED
07-Aug-97	Charge Cards Are Starting to Fail
26-Aug-97	Credit Cards Compliant?
29-Aug-97	Banker Warns: Lines of Code vs. Lines of Credit
09-Sep-97	The Bank of International Settlements Issues Y2K Warning
09-Sep-97	Banks Must Prepare for Shutdown of Services, BIS Warns
17-Sep-97	Visa: Not Quite Ready for Prime Time
18-Sep-97	Small U.S. Banks Lag Behind
23-Sep-97	NY FED President Says a Major Y2K Crisis Is Looming
23-Sep-97	Coordinating the Repairs of Every Bank
25-Sep-97	International Bank Wire Transfers: Noncompliant S.W.I.F.T.
30-Sep-97	VISA's Problem: Noncompliant Banks
01-Oct-97	VISA's Problem: Its Vendors and Partners
07-Oct-97	If 10% of the Banks Go Down, The Banking System Dies
08-Oct-97	Latin American Banks (and Everything Else)
09-Oct-97	Bank of Boston: 60 Million Lines of Code
21-Oct-97	Hong Kong Bank Issues Warning: No Compliance, No Loan
22-Oct-97	Mortgage Data Firm Faces Deadline Problem
22-Oct-97	Japan's Financial Structure: Little Awareness
22-Oct-97	Greek Banks Say, No Problem!
22-Oct-97	A Catastrophe Is Possible, Warns Comptroller of the Currency
22-Oct-97	The FED Will Not Certify Y2K Compliant Banks
22-Oct-97	Senator Calls for Laws Exempting Some Banks from Y2K Litigation
23-Oct-97	Euro Creates Nightmare Programming Problem
23-Oct-97	Euro Currency Costs in Europe: $150b, Says IBM
24-Oct-97	Letter from New Zealand Bank to Its Corporate Debtors
27-Oct-97	Bank for International Settlements' Warning (Sept. 1997)
27-Oct-97	As Serious as a Heart Attack
27-Oct-97	Cautious Optimism in North Carolina
30-Oct-97	Japan's Banks Are in Trouble Even Without Y2K
30-Oct-97	Australian Banks Are Doing Very Little About Y2K
04-Nov-97	VISA: Problems in Great Britain
05-Nov-97	New Zealand Central Bank: Plenty of Cash Printed Up for 2000
08-Nov-97	Bank of Japan Refuses to Discuss Y2K, Warns Management Firm
10-Nov-97	Some Senior Programmers Plan to Pull Their Money Out of Banks
10-Nov-97	It's Not Just Mainframes; It's PC's and Software, Too.
10-Nov-97	Bank of Boston: #1 Bank in Y2K Field Has Big Problems
11-Nov-97	Novell's CEO Warns About the Euro: It's Making Y2K Worse
17-Nov-97	House Banking Committee Chairman Sounds Y2K Alarm
17-Nov-97	FED: 90 Million Lines of Code
17-Nov-97	Comptroller of the Currency Warns About the Corrupt Data Problem
17-Nov-97	Citibank Warns: Disaster-Recovery Planning Is Needed
17-Nov-97	EDS, which Supplies the Banks with Software, Is Not Compliant
17-Nov-97	Gartner Group Assesses US Banking: Pervasive Problems
18-Nov-97	Greenspan Says Banks Need 100% Y2K Compliance: 99% Will Not Do
19-Nov-97	Tremendous Risks of Disruption, Says Bank for International Settlements
19-Nov-97	FED May Bar Transactions With Foreign Banks in 2000
19-Nov-97	Obscure Georgia Bank Slammed by FED for Noncompliance
20-Nov-97	Banker Warns of Weak Links in System
20-Nov-97	Maximum Risk: Big Banks or Small Banks?
24-Nov-97	Typical Irish Bank: 30,000 Programs, 30 Million Lines of Code
02-Dec-97	The Domino Effect in International Banking
02-Dec-97	FED Has 175 Full-Time Programmers, Needs 500 to 1,000 Temps
02-Dec-97	Local Banks Remain Blind, Says Y2K Consultant
03-Dec-97	Greenspan Warns About Japan's Banks -- Pre-Y2K
05-Dec-97	Chase Manhattan's Contaminated Data Problem
05-Dec-97	Foreign Banks Have Barely Begun Y2K Repairs
11-Dec-97	FDIC: Only 95% to Go!
12-Dec-97	Banks Must Have a Plan Completed Soon, Says Federal Reserve
27-Dec-97	FED Official Warns of World Economic Disaster
31-Dec-97	98% Accuracy Will Not Suffice, Says Banker
05-Jan-98	Credit Card Woes: Local Terminals
06-Jan-98	The Most Advanced US Bank: Not Nearly Compliant
09-Jan-98	Chase Manhattan Discovers 1988 PC's Running Some Operations
12-Jan-98	Language of Bank Disaster in Financial Press
13-Jan-98	Credit Cards Are Being Rejected for 00 Date
13-Jan-98	Australian Banks Have Barely Begun
13-Jan-98	"What's Going On?" Asks Bank for International Settlements
14-Jan-98	Regulators Warn Banks: Get Contingency Plans Ready!
14-Jan-98	Canadian Bank Official Warns of World Economic Crisis
17-Jan-98	Prediction: Breakdown in International Currency Markets
17-Jan-98	Bank Holiday: One Day Only (We Promise!)
19-Jan-98	BUSINESS WEEK says: Too Late for Small Banks
23-Jan-98	Smith Barney Deposits $19 Million into Each Client's Account
04-Feb-98	Bank of Hawaii: 170 Software Vendors, Plus Noncompliant PC's
06-Feb-98	Misleading Headline: 98% of Banks Are Compliant
09-Feb-98	Europe's Banks Will Not Delay Euro in 1999
10-Feb-98	Lawmakers Warn of Banking Chaos. It May Be Too Late.
11-Feb-98	Euro Programming Task: 5 to 6 Times More Complex Than Y2K
11-Feb-98	The FDIC Doesn't Know What's Going On, Government Report Says
11-Feb-98	FDIC Hasn't Met Its Own Y2K Deadline Standards
13-Feb-98	Federal Reserve Warns of Dire Consequences
13-Feb-98	Federal Reserve Vows to Begin Testing in July
16-Feb-98	FDIC Attorney Warns: All the Banks Must Be Compliant
17-Feb-98	EMU Deadline: Impossible, Says Y2K Expert
18-Feb-98	Banker's Warning: Breakdown of Payments System
20-Feb-98	FDIC Must Audit 40 Banks a Day
20-Feb-98	BUSINESS WEEK on Y2K and Banking: Small Banks Are in Danger
23-Feb-98	Saudi Bank Conference on Y2K
24-Feb-98	Delay Euro, says Robin Guenier, Britain's Y2K Campainer
26-Feb-98	Greenspan Warns of Trouble Ahead for Banks
27-Feb-98	Will Asian Banks Make It to the Year 2000?
27-Feb-98	Ex-Programmer Greenspan Admits: Y2K Is a Difficult Problem
28-Feb-98	New York Official Says New York Banks Will Make It
28-Feb-98	California Banker Is Fairly Forthright About the Risks
28-Feb-98	Latest Update on Y2K from Royal Bank of Canada (1996)
09-Mar-98	Philadelphia's Last Large Local Bank Sells: Y2K Problem
10-Mar-98	Citicorp's Bill: $600 Million
11-Mar-98	Yardeni Reports: It's Worse Than We Thought
11-Mar-98	Ex-Programmer Warns About Asia's Lack of Awareness
11-Mar-98	British Bankers Warn of Breakdown in Payments
13-Mar-98	The Party Line: Big Banks, OK; Small Banks, Beware
20-Mar-98	Japan's Fiscal Year: April 1 (Canada's, New York State's)
21-Mar-98	British Regulator: We Will Shut Down Noncompliant Banks
21-Mar-98	Sen. Bennett Says That FED Will Print Money
21-Mar-98	Federal Reserve Short-Changes Banks on Their Y2K Efforts
21-Mar-98	I'll Bet You Didn't Get Invited!!!
06-Apr-98	FED Says 90% of Bank Assets Are Electronic
06-Apr-98	FED Says, It's a Matter of Institutional Survival
06-Apr-98	The Threat to the Mortgage Industry
06-Apr-98	The Most Compliant Large US Bank Isn't Compliant
06-Apr-98	Sell Your Home, Buy Gold, Stockpile Cash, Says British Banker
07-Apr-98	Government Document: No Hope, But in Bureaucratese
07-Apr-98	International Bank Wire Transfer System: Test in July, 1999
07-Apr-98	Australian Banks: Many Have Barely Begun the Repairs
07-Apr-98	90% of US Banks Rely on External Vendors for Their Data Processing
07-Apr-98	Chase Manhattan: Not Yet at Code Remediation Phase
09-Apr-98	International Banking Conference on Y2K: Crisis Mode
09-Apr-98	Bank for International Settlements: Press Release on Y2K
09-Apr-98	Yardeni's Speech to the BIS: Worldwide Crisis Looms
13-Apr-98	Bankers Report That the Industry Is Not Close to Compliance
15-Apr-98	It's Your Money for Now. Not in 2000.
15-Apr-98	Bank Mergers and Y2K
15-Apr-98	Greenspan: U.S. Banks Are Kind of OK; Europe's Aren't
15-Apr-98	FDIC (Noncompliant) Issues a Deadline for Banks: June, 1999
15-Apr-98	Bank of America's Promise: Testing Will Begin on 12/31/98
16-Apr-98	Why U.S. Banks Cannot Possibly Make It
17-Apr-98	Unplugging Noncompliant Banks: The Dilemma
24-Apr-98	Bank Holiday in Great Britain: December 31, 1999
24-Apr-98	Dates for You to Contact Your Bank
28-Apr-98	Japan Will Melt, Says Peter de Jager
29-Apr-98	BankBoston Prepares Contingency Plans
30-Apr-98	FED Will Spend $100 Million to Get Compliant (Real Soon Now)
30-Apr-98	Beyond Repair: Siam Bank Finds 3/4 of Its Systems at Risk
01-May-98	Banker Warns of a Collapse in the Financial Services Industry
01-May-98	Official Contingency Plan: Buy Compliant Software . . . Later
01-May-98	FED's Kelley Warns of Major Consequences of Y2K Repair Failure
02-May-98	80% of U.S. Banks Are Dependent on Software Vendors; No Contingency Plans in Case Vendors Fail to Deliver
04-May-98	10% of U.S. Banks Won't Make It, Says FED Advisor
04-May-98	FED Promise: Testing Will Begin in June, 1998
09-May-98	Banks to Begin Testing on June 29
11-May-98	Japanese Banks Have Barely Begun Y2K Efforts
11-May-98	Japan's Housewives Have Begun the Bank Run
14-May-98	Australian Banks to Begin Testing This October
18-May-98	Some U.S. Banks Are Only Now Considering Y2K
18-May-98	Beirut: Another Disaster in the Making
21-May-98	49 Japanese Banks: $249 Million for Y2K, Total
22-May-98	Australian Banks at Risk
22-May-98	Moody's Issues Warning on Japanese Banks
23-May-98	27 Philippine Banks Are Now Compliant . . . Soon
25-May-98	Bank of America: $350 Million Budgeted
28-May-98	Contingency Plans Ordered by Federal Government
28-May-98	Government Tells Banks to Level With Their Customers. Real Soon.
29-May-98	German Central Bank Pushes Banks Into Awareness Phase
31-May-98	Chase Manhattan Executive Says Y2K Has Many Advantages
02-Jun-98	Japan Faces Disaster: Chamber of Commerce, Japan
02-Jun-98	Japan's Banks Could Precipitate Crisis
02-Jun-98	FDIC (Noncompliant) Says Most U.S. Banks Are Making Progress
08-Jun-98	Bank of Japan's Checklist for 2000 (Aug. 19, 1997)
09-Jun-98	Canada's TD Bank: Assessment Stage
09-Jun-98	Analyst Says Y2K No Threat to Banks or Stock Market
12-Jun-98	The Bank of Montreal Will Finish Its Code Repair On. . . .
12-Jun-98	Bank of England Says a Catastrophe Is Possible
12-Jun-98	Banks Are Prohibited from Revealing Much
12-Jun-98	25% Say They Would Make a Run on the Banks