Dear Ed, this may not be a valid question,more just a thought l guess.I have recieved flyers from the bank phone and insurance company about the Y2K and how prepared they are,and not expecting any trouble.Now my question is,if this all fails in some way what will this do in the future regarding trusting these companies and also the government.As the time approaches the more honey dripping flyers we recieve.Could this have an impact on the banks in the future?

regards Vicki From Australia

-- Vicki Adams (lights@altu.net.au), September 03, 1999

Answers

Vicki,

Your question about the possibility of Y2K affecting the credibility of banks, governments, and institutions of all kinds is a crucial one. Of course, there is very little faith in such institutions even today, at least in the U.S. It has put all of these organizations in a very difficult position -- basically they're saying to us, "Trust us when we tell you that we're going to be okay for Y2K" even though they know (a) that we don't trust them, and (b) the only way that could achieve that trust would be to publish the details of an independent third-party validation/verification/audit, which they're not willing to do.

Given that the banks are the most highly regulated industry on earth (at least in the U.S., UK, and Australia), and given that many of those regulations were instituted after the 1929 crash and ensuing Depression caused a great loss of faith and credibility in the banks ... one has to wonder what will happen if the banks crash again because of Y2K?

Of course, one could argue that the average citizen in 1929 didn't have any warning that things would crash so quickly and so badly (on the other hand, he didn't have the reassurance of any protection through devices like the FDIC or whatever government-backed insurance on bank deposits you've got in Australia). By contrast, one could argue that everyone knows that Y2K is coming, we know exactly WHEN it's coming, and we know (at least in theory, if not in fact) that banks are vulnerable.

There's an old proverb that says, "Fool me once -- shame on you! Fool me twice -- shame on me!" Perhaps people would figure out that they shouldn't blame the banks for Y2K, because there was never any reason to trust them in the first place!

-- Ed Yourdon (HumptyDumptyY2K@yourdon.com), September 03, 1999.

Zoobie,

Yeah, I think there will be banks ... maybe not the same banks, maybe not organized in the same way, maybe not based on a fractional reserve system, maybe not based on a fiat, government-controlled currency. But there will almost certainly need to be some entity that connects lenders and borrowers, unless all of this can be arranged by some new kind of e-Bay organization. (Maybe e-Bay will become a bank!)

Ed

-- Ed Yourdon (HumptyDumptyY2K@yourdon.com), September 03, 1999.

You believe there'll be banks in the future?

-- zoobie (zoobiezoob@yahoo.com), September 03, 1999.

I'm sure there will always be an exchange of energy.But if we no longer use fractional reserve banking and fiat money,are we not talking about an entirely different society?Exciting and terrifying all at the same time.

-- zoobie (zoobiezoob@yahoo.com), September 04, 1999.

I wonder how many local banks sprang up during the hardest of times. Certainly, there were those who were well known and admired for their character and they also had capital enough to get something going. I suspect the same should happen again. Why would you think otherwise? I think this a fair and straightforward question-- nor is it meant to bitter this thread. What now can make the future different from the past?

Sincerely, Stan Faryna

-- Stan Faryna (info@giglobal.com), September 05, 1999.

"Only the federal Government can take something valuable like paper and ink and turn it into something worthless like paper cerrency"

What is money worth? If the definition of one dollar is 100 cents and one cent is 1/100 of a dollar, ????

-- Jim (waitingisthehardpart@aol.com), September 07, 1999.