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(feel free to mail this page) (Links to documents appear after the summary.) Telecommunications are crucial. Modern society rests on telecommunications almost as heavily as it rests on electrical power. Modern banking could not survive in its present form without telecommunications. The question is: Can telecommunications survive without modern banking? For how long? If the banks go down, what will replace money, especially money that today is sent by mail, credit cards, or bank wire transfers? Face-to-face transactions can use gold or silver coins or even paper money. But this does not solve the division of labor problem beyond the local community -- and maybe only the neighborhood if gasoline becomes unavailable. How will phone companies get paid? How will they pay their suppliers? This is the two-part problem that will face every industry and every public utility if the banks go down. How real is the threat of a banking collapse? I think it is high. This is my major concern over y2k -- the concern, above all others, that can be documented today. Bank runs could destroy the banking system. Also, the breakdown of computers will surely bankrupt them. A one-week lock-out of a modern bank from the computerized capital markets will bankrupt any local bank. The banks are too dependent on computers to survive without them, just as they are too dependent on public confidence to survive without it. Both dependencies are threatened by y2k. The threat here is a breakdown in the means of payment. A new currency system will emerge, but how fast? Months? Years? What happens during the transition? The division of labor keeps most of us alive. Without money, the division of labor collapses. A functioning telecommunications system will be vital for the rapid development of new forms of money and new means of payment. If the Internet stays up, there is hope for the division of labor. But the telecommunications system itself relies on an extensive division of labor. If the banks go down, will telecommunications stay up long enough to enable society to replace them? On this question hinges the literal survival of millions of people. The answer depends on a series of factors that nobody can accurately predict today: the number of noncompliant chips in switching systems, the effects of any noncompliant chips in switching systems, the actual software code that operates the many local systems that comprise the telecommunications system, the absence of international coding standards, noncompliant billing software, and the survival of means of payment. The answer is: "We do not know." This is what makes y2k an all-or-nothing bet. Here is what we do know. AT&T has 500 million lines of code to go through. Sprint has 100 million lines. Let us pray that the programmers can solve their problems. Our lives depend on them. Problem: if programmers lose their jobs in 1999 because of bank runs, will they stay on the job in large cities to work on the various repairs? I don't think they will. This is the Catch-22 of a society that has entrusted its very survival to fractional reserve banks and computers.
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