Your Banker Will Tell on You
by Fred E. Foldvary, Senior EditorStarting on April 1, when you take your money out of the bank, the bank might consider this suspicious and inform the government. They might even confiscate your cash. Big Brother will be watching whenever you make a deposit or withdrawal of cash.
By now most folks have heard of the Y2K (year 2000) computer problem where programs only use two digits for the year so they treat 2000 as 1900. Lots of people will be converting some of their bank account money into cash in case the banking system is disrupted in January 2000. Even though the federal reserve will store some extra cash, there may be a cash shortage if too many people want to hoard cash, fearing disruptions not just in banking but even in the provision of electricity.
The problem may start before January 2000, as various companies and governments start their fiscal years throughout 1999. The first major test will be April 1999, when the United Kingdom and New York State, among others, will start their fiscal years. On July 1, 1999, many other governments and organizations start fiscal 2000, and the federal government starts its fiscal 2000 in October.
The US government fears a money panic. The Federal Deposit Insurance Corporation has proposed a "Know Your Customer" regulation which will force banks to spy on their customers and report any "unusual transactions" to federal investigators, starting April 1. The regulation will require banks and other financial institutions to develop customer profiles, monitor bank transactions, and report to the government any "unusual activity" such as large cash deposits or withdrawals. Bank tellers will be asking their customers where they got their money and how you plan to spend it. If you say "I am taking my money out so I'll have cash in case the banks fail in 2000," they may report you to federal law enforcement agencies.
Of course, storing cash to be ready for the year 2000 is not yet illegal, so the government may instead accuse cash hoarders of being drug dealers. Americans could find themselves trying to prove to agents from the FBI, the Internal Revenue Service, or the Drug Enforcement Agency that they are not drug dealers or money launderers. Your money and other property could then be subject to asset forfeiture -- confiscation, if you can't immediately prove you're not a criminal.
If you wish to comment on the "Know Your Customer" regulation, write to: Robert E. Feldman, Executive Secretary, Attn: Comments / OES, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. Faxes can be sent to (202) 898-3838, and e-mail to comments@FDIC.gov.
I'm not necessarily recommending that you contact the FDIC about this, since they may be keeping track of protesters. Yes, perhaps I'm paranoid about this, but when the federal government wants to confiscate someone's cash just because he is making a large withdrawal to get ready for Y2K, some fear of the government keeping track of "protesters" may be justified.
I fear this government snooping and threats of confiscation is just the beginning. Already, there have been year "99" computer errors and program failures. In Singapore, computerized taxi meters went dead on January 1, 1999. Some medical products such as patient monitors displayed the wrong date. Computers at Swedish airports failed at midnight January 1. So far these have been local problems, but they indicate the possibility of much greater and widespread errors and program breakdowns for the year 2000.
This "Know Your Customer" will not stop panics and hoarding cash if there are major computer problems when fiscal year 2000 starts in April or July. When bank tellers start quizzing their customers about their cash withdrawals, people will be taking their cash out from ATM machines. The government will then reduce the amounts one may withdraw per day and per month. People will then really panic and start buying gold and silver coins. Indeed, the premiums for silver coins over silver metal have already increased. Some folks are already stocking up on silver dimes and quarters and tenth-ounce gold coins.
The federal government is destroying its own fiat money system. When cash is no longer usable as an anonymous medium of exchange, an underground market using gold and silver coins will emerge. The government can try to scare people with random confiscations, but if too many people hoard cash and coins, even the government will not be able to stop the stampede.
The biggest threat to the US money and banking system may not be Y2K itself, or even the fear of it, but the government's own panic. By threatening to confiscate and restrict cash withdrawals, the government may instigate the panic that will wreck the American economy. The word for this disease is "iatrogenic".
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Copyright 1999 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.