Bank runs : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Hello all,

I do enjoy (most times) reading this forum. I feel I get a heads up well in advance of others. My question is this:

How many think bank runs will begin in Jan 1999? Many people I talk to indicate that they are waiting until Jan to withdraw funds from IRA etc so the tax will not be due until April 2000. I imagine it won't take a lot of people doing this to cause the Federal Reserve Bank to take notice. Any Comments?

I also have some information concerning another area that causes me concern but could get some people in trouble if I tell and I gets back to hurt them. I have not heard my information dicussed anywhere. This information just confirms what you most belive anyway and knocks the wind out of some of the media reports we are hearing.

-- Mike (, November 19, 1998


I HATE it whaen this happens!!

So SHARE it already, Milne-head!!!!

apolo. to Paul

-- so_share_already (, November 19, 1998.

I think the bank runs will start mid-1999.

-- Dave (, November 19, 1998.

Ok, so I have been "lurking" for a LONG time here. My take on it, we simply DO NOT HONESTLY KNOW, do we? BUT, I already took my lil bit out along time ago. As we can see, it did'nt hurt. Only problem here is if you dont have it out by now, this could happen at any time and then what? If most believe there WILL BE question is WHAT THE HECK R U WAITING FOR? Why on earth would you keep your $$ in the bank?

-- Closet (, November 19, 1998.

Depends on if we create panic or cooperation.

As of this timing, I feel the bulk potential is April to June '99, smaller amounts starting January and ramping up.


-- Diane J. Squire (, November 19, 1998.

If I had to pick just one month, I'd guess August, 1999.

-- Kevin (, November 19, 1998.

Here's the problem with taking your money out of the bank: Where to put it? -- if it's over six figures, say. Emptying your account is not a problem if you have only a few hundred dollars. But where to put serious money, if you don't trust the banks? In a safe in your closet? Bury it in the backyard?

Please don't sneer at this question. I have managed to accumulate a nice nest-egg & would rather not see it disappear in a bank-run, nor in a house fire either.

-- Ben Dair (, November 19, 1998.

In answer to Mr. Dair: Most people wish they had your problem. If I did, I would buy a farm or such, and develop the land to support family, or friends and whomever would share the same style of living. To let such a valuable resource ( at the present) go to waste is a crying shame.

-- Type r (Sortapreparin@polly.anna), November 19, 1998.

We are presently in an unofficial global depression. There are unemployed sleeping in the streets of Japan. The Fed is busily trying to buoy up nations and economies and U.S. BANKS! Greenspan's unannounced rate cut has been seen by many to hold up U.S. banks in trouble with money in Brazil and hedge funds. Forget y2k for the moment. Any major default by a nation or bank could be the straw that causes a cascade of failures, defaults, and market withdrawals. In that environment people will run to cash. Take out your extra cash and put it in a safety deposit box. At the first sign of bank runs you can go get it. What do you lose- 2-4% in interest?

What kills me are the bank heads who accuse depositers of being unpatriotic for withdrawing their OWN hard-earned money. Give me a break. y2k bank runs start next fall.

If you are in six digits, you will rue the day you did not buy goods with it now. Goods that could always be used. If you are withdrawing a large amount call the bank and let them know, that's all folks.

-- Bob Brown (, November 19, 1998.

To Bob - yes I think you are being very realistic, it *could* just take one major event to create a domino effect leading to bank runs.

However, there is a school of of thought that dollars will flow into gold and precious metals - a "flight to quality".

However putting gold and dollars in a safety deposit box *IN A BANK* is wrong wrong wrong!

What if the runs start and you can't get to your box in time and they lock the doors of the bank - there is a bank holiday. You are now up the proverbial swanee. Or you get to the bank and there are 300 people lining up and it's almost closing time...

Buy a fireproof safe, bolt it somewhere where people will fear to tread, perhaps next to your sleeping mother-in-law, tether your three pit-bulls to it (the safe)...:-))... or bury the money somewhere safe... or I suppose you could use a commercial safety deposit box company like Brinks but I wouldn't trust any of these either.

It's your call - no easy decision on this one I'm afraid.

Cheers, Andy

-- Andy (, November 19, 1998.

I took a loan out from my 401K fund for purposes of using the cash to begine purchasing supplies, but then got laid off. No tax problem until I got laid off. Now the government will get 20%.

I am one who is waiting until Jamuary 1st to withdraw my funds simply because of tax purposes. I don't have 6 digits, but close. I plan to sell my house ASAP, flee the city and buy a farm (somewhere). If I trusted folks I meet on the Internet I would invite you to come share. But I don't and I won't. Hopefully I will meet nice neighbors, and with them I will share (and barter).

My bank run begins January, 1999.

-- Lurker (, November 19, 1998.

Mike, I happen to know of several people who have already done their "bank run" months ago. I remember when I was first told to do so on this forum and I thought NO WAY! I had worked for Bank of America for 15 years and always felt my money was safe there. I don't think that anymore! And I also was very shocked to see that just recently ol' B of A almost croaked! My thoughts on IRA's? Not sure, but I will consider withdrawing after Jan. 99 a small one that hubby has. I can use the money to be better prepared for y2k. I know that there is a penalty, but that's okay. A couple months back there were some pretty interesting ideas on Midnight Gardening here on the forum. Then again it depends on where you live as to whether or not you might want to plant your nest egg in the back yard. Hard to know just what to do, huh? Blondie

-- Blondie Marie (, November 19, 1998.

I own a small business...for the past few months I have only deposited checks....holding my profit in cash. Stash the cash but not at the bank. This was a small thread on c.s.year.2000 ("cash in bank") for past couple of days. It is just above Dinty Moore vs Demi Moore for y2k storage. Virtually everyone giving advise about y2k is saying to have from 2 weeks salary in closing your account. With a small business I must keep an account at the bank but with a balance to just handle the bills. I do not believe it will get tense at the banks until after July 1999. Why wait until the last minute...start now to I suspect most of you are doing. I'm going to just set here and ignore the black helicopter landing out back..........

-- ronbanks (, November 19, 1998.

First I wish I had the million dollar problem. If It did I would be tempted to diversify: some in my back lawn, some in a home safe, some in supplies, some in a safe deposit box, some in gold and silver. You see the idea: if I lose any one stash, I still have the rest.

Second, I know that a lot of people have the January 1 idea, for all of those reasons. I don't think there are enough to start a bank run. I do think that there will be enough withdrawals, beginning January, 1999 that they will be publicized. If enough people begin hitting their 401Ks it can put a dent in the market.

Consider this: if you initiate a 401K withdrawal on January 1, it might not be until late in February until you actually have the money, transfered to a bank, and then withdrawn into cash or converted into gold or whatever. This indicates that there will be a build up of withdrawals, so that by March things will get interesting.

-- rocky (, November 20, 1998.

When storing your money, you discussed your back lawns, safes, various investments and goods and so on. However, you forgot to consider one very important possibility, possibly the best on option:

What about MY back lawn?

It's in Sydney, where there are very few armed criminals, in the suburb of Mosman (the car thieves/vandals tend not to enter peoples' property, unless there's a carport, which we don't have). Two dangerous cats roam the premises day and night (except in winter, spring, fall and most of summer when they focus on in-house security.) And the last two attempts of arson on the house failed completely.

Best of all, you can FedEx your cash to me and I'll even save you the trouble of burying it yourself! It'll cost you four hundred dollars to buy a good safe, but you can send it to me for nothing and it'll be 21,000 km away from any unpleasant American thugs..

This is a serious suggestion. I really want to bury your money. My garden desperately needs carbon nutrients, and I'm not going to waste any of MY newspapers.


-- Leo (, November 20, 1998.

I have just signed a petition on a Year 2000 web site that I thought you might be interested in signing as well.The petition urges the federal government to take six specific actions that will strengthen our nations's banks and reduce the chances of panic-driven bank runs. If you'd like to sign it, too, here's the direct web address to visit:

-- ronbanks (, November 21, 1998.

From my amateur investigation of the banking system, would it not be better if some people started withdrawing their money now? I've heard that if 2% withdrew their money than the banks would all run out of cash. But doesn't that presuppose that that everyone tries to get it out at once? Isn't it easier on the banks if withdrawals are done gradually?

Also, on the banks' balance sheets, isn't a bank run revenue neutral? If a bank is temporarily out of cash couldn't the depositors still write checks?

-- Joe O (, November 22, 1998.

The Fed should keep it mouth shut. I'm starting to see more and more articles about Y2K bank runs. If I was told over and over not to worry, I'd start worrying. An article in our local newspaper yesterday said to "stay calm, everything is fine, we will have enough money to cover any runs."

Now, just based on that crap, I'd start pulling money.


-- Dave (, November 22, 1998.

I'm with you on that Dave. Last night I had my in-laws over for dinner. My 81 year old father-in-law brought up an article about bank runs he read this week, and started the talk about Y2K. First time ever this subject comes up with him. I had the impression he was feeling us out and watch our reaction. He's a smart ol' coot and reads a lot since retired. My husband looked at me with a desperate look in his face that meant "oh no, please Chris, don't go into it." I only said that we were worried about this too and taking some precautions.

-- Chris (, November 22, 1998.

Demi Moore storage? Is that more secure that pit bulls shackled to a mother-in-law? 8<)

Diane - you mentioned early April 1999? Why so early?

Assume 10% "get it" and don't need to panic. They've prepared. (Libertarians and home schoolers ?)

Assume 10% will never "get it" - I don't know what will happen to them, but they may just sit there because they believe the government/social services will be able to pick them up and deposits them in a shelter. Others will ..... ?

20-40% get concerned at mounting evidence, and try to "super-rush-prepare" in maybe Oct-Nov-Dec = definitely will increase the self-fullfilling prophecy factor.

This leaves 25% who will absolutely panic last three days of Dec.

And maybe 20-30% who will try to panic in first days of January, but won't be able to because of fear/lack of power/lack of transportation.

-- Robert A. Cook, P.E. (Kennesaw, GA) (, November 22, 1998.

Y'all need to go read this message on Gary North's new answers page:

"Bank Runs Could Be Precipitated by Small Businesses"

This puts a whole different light on this one.


-- sweetolebob (, November 24, 1998.

I don't expect a bank run until April-May. Canada and New York State go into fiscal 2000 then and problems should arise. Late or no government cheques will create a stir. In Canada, RRSP contributions can be made for 1998 to the end of February 1999. Then there will be massive withdrawals from RRSP accounts which triggers a stock market crash if the bull holds on that long.

Today I read that Americans again were spending more than they made. Maybe there won't be that much to take out of the banks.

-- Rick Reilly (, November 26, 1998.

"Today I read that Americans again were spending more than they made. Maybe there won't be that much to take out of the banks." Good point, Rick. In October, Americans spent 0.1 percent more than they earned. In November, it was 0.2 percent. Sounds miniscule, but it's also a first. Not even Christmas shopping season yet. When I read that, I wondered if part of it might not be y2k-related bank withdrawals by the kind of people who post and lurk on this forum. So tell us -- anonymously, of course -- all you out there. Have you been drawing down the bank accounts lately, slowly and ever so carefully, and tucking it in that legal size envelope in the bottom of your sock drawer? (How would I know? I have a sock drawer too, y'know.)

-- digging in (, November 27, 1998.

Here's a tool that could help someone ambitious see if a bank run is on the way. I'm too lazy to do the calculations, and I don't know if I understand the technicalities involved. The link is:

The link is for calculating the reserve ratio of the U.S. banking system. A declining reserve ratio could indicate extra cash withdrawals are already taking place.

Anybody want to take this project on?

-- Kevin (, November 27, 1998.

Expanding on what rocky said:

"Consider this: if you initiate a 401K withdrawal on January 1, it might not be until late in February until you actually have the money..."

Now, does that imply that if on December 1, 1998 one were to initiate a 401k cash-out, that the result would be that it would not actually happen until early 1999, in which case taxes would not have to be paid until April 2000?

-- Jack (, November 27, 1998.


Yes. That is precisely what it means.

Most (at least 90%) of the people in the U.S. are "annual" type income tax filers. Known as cash year, or calendar year filers.

Your income is determined as of the date that the money is actually received by you, or is "constructively received" (read; credited to your account and therefore available to you").

If you apply for your money in December of 1998 and do not receieve it until after January 1, 1999, it is considered to be income in the year 1999.


-- sweetolebob (, November 27, 1998.

Thanks, sweetolebob! It seems logical, but best to be sure!!

-- Jack (, November 27, 1998.

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