On This Day Pre-Y2K

Confused by any of the jargon you see below? Check the Y2K Glossary!

May 3, 1999 Permalink

Y2K has gone through the following stages in the mind of 99.9% of the American public, and a higher percentage abroad:

1. 1996. Never heard of it.

2. 1997. I think I’ve heard something about that. Bill Gates will fix it. Besides, I don’t own a computer.

3. 1998. I’ll have to do something about that next year.

4. 1999 (January/February). I’m buying some canned goods and flashlight batteries.

5. 1999 (March/April). I’m glad the whole thing’s over.

Gary North

Murray Rothbard has described the history of the business cycle theory of Ludwig von Mises. In the 1930’s, F. A. Hayek exported it to the English-speaking world. In 1974, he won the Nobel Prize for this work, which was really Mises’ work. Mises had died in 1973, and so was ineligible.

The 1912 theory argued that an expansion of bank credit lies at the heart of every recession. The deflation/recession is the result of a prior inflationary boom. This theory has been fiercely resisted by economists since 1936.

The United States has about $6 trillion in electronic money (M-3). It has less than $500 billion currency in circulation, since most of this is outside the U.S. (2/3 to 85%). So, any shutdown of the banks will bring deflation and depression on a scale never before seen.

Economists dismiss y2k because it is a market factor. They cannot accept the fact that something profitable -- lower computing costs, 1950-1999 -- could cause a collapse of the economy. This suggestion assails their religion of the free market.

In 2000, this religious confidence in the market will be shattered -- not that government planning will do better.

The public in 2000 will demand martial law, i.e., government control over production and distribution.

—Gary North, garynorth.com, 05/03/99

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