Fed's Kelley reverses Y2K position + railroad facts!
FED'S KELLEY REVERSES POSITION ON Y2K In this Reuters story (link below), Federal Reserve Governor Edward Kelley has
declared that our worries about Y2K are for naught. He says that thinking there might be a recession is "a stretch."
Y2KNEWSWIRE agrees. A recession is highly unlikely, it's the worldwide DEPRESSION coupled with a sudden contraction in the
money supply (deflation) that's the most likely outcome.
Kelly also says the cash problem is really no problem at all: "We will ... be ready if people want to hold more cash on New Year's
Eve 1999, and we will be prepared to lend whatever sums may be needed to financial institutions through the discount window under
appropriate circumstances to provide needed reserves to the banking system."
Kelley will be right if no more than 1.17% of the banking customers in the country actually want their cash, because that's exactly
what percent of depositors will get their cash if they demand it. (For proof, see this Y2KSUPPLY.COM link which quotes and charts
actual Federal Reserve figures: y2ksupply.com )
But if a significantly higher percentage of depositors actually demand their cash, Kelley will be wrong. And the FDIC, which holds a
little over $1.25 for every $100 they "insure," will also be unable to significantly help. You can see those figures at:
y2ksupply. com/fdicchart.htm
Y2KNEWSWIRE subscribers have been aware of this for quite some time. That's why over 220 people have signed our bank petition
demanding the Federal Reserve take additional action to save the banking system from upcoming Y2K-induced demands for cash.
You can sign our petition, too, by visiting: y2ksupply.com
On January 1, 1999, we send copies of the petition to every U.S. Senator, as well as the President and Vice President. If you feel
passionate about doing something proactive to try to prevent Y2K-related bank failures, which would RUIN the economy, you may
want to read the petition and consider signing it yourself.
Back to Kelley and the Fed:
THE BIG REVERSAL The most surprising part of this story is how Kelley has almost completely reversed his position since
December, 1997. Read below exactly what Kelley said before the Professional Bankers Association less than a year ago:
"The Millennium Bug, or Year 2000 problem, has the potential to seriously disrupt the infrastructure of computer systems and
telecommunications that the world community depends upon for the free flow of funds and payments and hence, virtually all of
everyday commerce."
"My purpose today is to identify the serious nature of the problem and the urgent need for immediate action by the government of
every nation..."
"...banking systems and financial services rely heavily on computer systems to manage and deliver services electronically. With the
linkage of payment systems globally, a failure of any linked system could have waterfall effects to other systems and a disastrous
result to the world economy."
Then he describes some "what if" scenarios that he says, "... bring a practical perspective to the effect of what could happen..." :
"The computers in financial services organizations, etc. cannot deliver payments to counter parties, or receive funds from them.
Gridlock ensues."
"The power company's production is controlled by innumerable computer chips, which were installed many years ago and no one
knows what they do, how they work, nor dare they touch them, because the whole of the plant might come irreparably to a
standstill."
"Your medical center's computer has problems and cannot trace the medicines your elderly mother has been prescribed in the past
nor the conditions she has had. A doctor prescribes the wrong medicine and she becomes very ill."
"You try to draw money from an ATM and it refuses, even though you know you have money in your account. Your bank's computer
thinks it is January 1, 1900 -- and you weren't a customer then!"
YET ANOTHER KELLEY STATEMENT... Ths one, printed in the Miami Herald on March 1, 1998, shows a still-concerned Kelley as
of early 1998:
"Some people with technological expertise think the whole 'millennium bug' issue is overblown. Don't you believe it", said Kelley.
"Comments that doubt the seriousness of the problem are dead wrong."
Would that include himself?
THAT WAS THEN, THIS IS NOW How exactly does Kelley's statement in December of 1997, "...a failure of any linked system
could have waterfall effects to other systems and a disastrous result to the world economy..." jive with the statement he made
yesterday: "...cautiously optimistic that the millennium bug will not cause major economic disruptions when it bites. " ?
These statements simply don't compute, not by any stretch of the definitions of the words used here (which these days is always
called into question). The question we should all be asking is simply, "What changed from last December of 1997 to October of
1998?"
What changed, simply put, is the willingness of the Federal Reserve to tell the truth to the American people. The Fed is now
engaged in a campaign of minimizing every risk and maximizing vague statements of progress. Officials at both the Fed and the
White House are using phrases like, "I believe there will be no problems..." rather than stating, flat out that the problems were
solved and there will FOR SURE be no problems. They can't claim that, because that would be an outright lie. And while it's okay to
"fib" at the top levels of government, lying about anything other than sex can be dangerous to one's political career. So the fibbing
continues.
This is quite a fib, considering the drastic negative consequences it may have on the American people when they find out the banks
really don't hold their money after all. If anything, the Fed should be printing cash like mad, stocking the banks with it, and assuring
the people that yes, the problems are bad, but they are taking action. Instead, they simply sit in a state of Y2K denial.
Interestingly, the story says that, "The U.S. central bank, which controls monetary policy, can reduce interest rates to make it
cheaper to borrow and so encourage consumer demand."
This statement is seemingly made with no awareness of the underlying mechanisms of banking. When people withdraw their cash
and stuff it under the mattress (instead of spending it), the money supply suffers a severe and rapid contraction. That not only
DEFLATES the dollar (making each dollar able to buy more while putting downward pressure on prices), it also steals lending
capital from the banks. See, every dollar you deposit is multiplied by the inverse of the reserve ratio to create "new money" (out of
thin air, literally) for loans. When cash is yanked from the system by anxious depositors, that process is reversed, and for every
dollar a person withdraws, the bank effectively loses the ability to make (at least!) twenty dollars in loans. For this reason, lending
capital would dry up under these potential conditions, and reducing interest rates a few points will hardly matter.
Y2KNEWSWIRE MEETS WITH THE FED Y2KNEWSWIRE sat down with a face-to-face meeting with a senior Fed official recently
to verify the accuracy of the above statements. Yes, according to the senior Fed official (who obviously wishes to remain
anonymous), this scenario is indeed correct. Massive deflation is the most imminent risk, and the FDIC is completly unable to bail
out any significant percentage of depositors if banks begin to fail.
This official even mentioned the Fed is unable to print significantly more cash for the simple reason that they have no place to store
it!
On a final, interesting note for this story, if Y2KNEWSWIRE, Gary North, Ed Yourdon or Jim Lord had made the statements
attributed to the Fed's Edward Kelley in December, 1997, we would have been called fear-mongers. More on that below.
You can read Kelley's December 1997 statement at: y2ksupply.com
Reuters story at: biz.yahoo.com
THE TRUTH ABOUT RAILROAD TRACK SWITCHES One of the best parts about being involved in the Y2KNEWSWIRE alerts is
the extremely intelligent feedback we get from readers. The fact that we allow people to e-mail us at tips@y2knewswire.com (and
we GUARANTEE anonymity) results in the daily receipt of extremely detailed technical updates from people working in almost every
industry. We receive e-mails from people who would be fired for saying publicly what they're telling us privately. As usual, if you have
something you'd like to get out into the public about your company's Y2K compliance (or lack thereof), you may e-mail us and you
WILL be protected.
One such reader has worked in a railroad shop producing special trackwork for over 15 years. This superbly qualified him to
comment on the debate about whether railroad tracks can be switched manually if the railroad's computer go down.
But first, let us remind you why this question is CRITICAL to understanding the impact of Y2K on American cities. Railroads are
vital to the running of this country in countless ways. The most important, of course, is the delivery of coal to power plants. No coal
means no power, and no railroads means no coal. This is not a difficult cause-and-effect puzzle, really. Railroads are crucial.
Railroads also help move food, chemicals, finished goods and raw materials. Without railroads, our economy would be SEVERELY
disrupted. We're not aware of any studies showing exactly how disruptive such a problem would be, so we don't have numbers to
share on it, but even a little common sense will tell you that if coal deliveries stop, our country is in real trouble.
TRACKS HAVE TO BE SWITCHED For railroads to work, the track switches have to work. If the track switches don't work, the
trains simply can't use the tracks. Computers currently control the switching of these tracks. And these aren't just PCs running
Windows 98, many of them are old, out-of-date mainframes with custom-written software that is currently non-Y2K-compliant
(although they're working on it). Furthermore, these computers are controlling the tracks remotely, over long-distance
communications lines, which also means that if telecommunications suffers major disruptions, the railroads will, too.
And track-switching is a TIME-SENSITIVE event for obvious reasons. Timing is everything. If the track isn't switched at the right
moment on the right day, the trains go onto the wrong tracks or, in the worst case, they collide head-on. Because these
track-switching systems are time-sensitive, they MUST be remediated or they face a chance of being unable to operate correctly
beyond January 1, 2000.
CAN THEY BE MANUALLY SWITCHED? The question that has been raised publicly by Gary North, Y2KNEWSWIRE, and dozens
of other Y2K informers, is, "Is it reasonable to think that tracks can be switched manually?" In other words, many of the Y2K
naysayers are claiming that the railroads can simply go back to "manual mode," where you have guys with lanterns running around
the tracks, pulling levers to switch them. The coordination of these people has not really been explained (it would seem impossible),
rather, the focus has been on the mechanics of whether or not the tracks can PHYSICALLY be switched.
Yesterday, Y2KNEWSWIRE pointed out that even if you wanted to throw the switch, there was no switch to throw. This has been
confirmed as fact: hardly any physical railroad switches exist anymore. They've simply been replaced by mechanical
computer-controlled switches.
Today, we received this explanation that offers a far more detailed view of what's going on with the track switches. This is fascinating
reading:
THE RAILROAD SWITCH DETAILS "A railroad switch is basically a pair of rails, appropriately machined to fit snugly against the
track rails in either position. These point rails are connected by one or more rigid rods attached to the rail base, passing under the
track rails. Switches to be thrown by hand require a switch stand, connected to one or more of the switch rods, designed to provide
mechanical advantage sufficient to slide the point rails into position when an operating lever is moved. The point rails rest on steel
switch plates, and friction between the base of the switch point and the switch plate has to be overcome."
"...almost all switches now are controlled by computer. Remote-controlled switch stands are actuated either hydraulically or by
electric motors. These switches still may be thrown by hand, but to do so the switch stand must be disconnected from the switch
rods. Then a heavy pry bar can be used to wedge the points to the desired position. This would have to be with care as failure to
close the switch firmly could result in a derailment. And nothing could insure that vibration from trains running throught the switch
would not cause the points to separate slightly from the track rail, with a possibility of derailment."
What we're learning here, essentially, is that "manual switching" requires some big husky guy standing there with a giant crowbar,
trying to slam the rails into one position or another. And if he messes up, the train derails (which would presumably shut down that
segment of track to ALL other rail traffic for a matter of days).
Mind you, this is the "solution" provided by some Y2K-naysayers out there who are still convinced the world can be run manually.
Let's consider this: you're going to call for a hundred thousand strong men to stand by the railroad tracks, with a hundred thousand
crowbars, and then somehow they are going to be told which way to pry the tracks. If they mess up, there is a serious risk of train
derailment which would block that track segment for a period of days.
If this is the "solution" to Y2K, we all have a legitimate reason to be worried. On its face, the idea seems entirely loony. You can
just see the recruitment center for these guys:
RECRUITER: "Okay, here's your crowbar, now go find a switch and stand next to it."
WORKER: "What do we do with the crowbar again?"
RECRUITER: "You pry the tracks either to the left or the right."
WORKER: "Oh. So how do we decide whether to pry to the left or the right?"
RECRUITER: "Someone will tell you."
WORKER: "How will they tell us exactly?"
RECRUITER: "We haven't figured that part out yet, but when we do, we will tell you that, too."
WORKER: "So we stand there and pry the tracks, right? What if we see a train coming and nobody has told us yet which way to
pry the tracks? Should we flip a coin?"
.. and so on.
Our contributing railroad engineer goes on to explain further:
"In the case where either the controlling computer, or the supply of electric power, fails, someone would have to be present at each
switch to be thrown. A large city marshalling yard, where trains are made up, may have hundreds of switches. Transcontinental
lines, where not double-tracked, have long sidings in remote locations, allowing one train to wait while another passes. Manning all
these switches would obviously be an enormous problem. Coordinating the job would be another."
Indeed.
FEAR-MONGERING? A few concerned people have written to Y2KNEWSWIRE, asking if we are fear-mongers. This is a legitimate
question, because, no doubt, there ARE fear-mongers out there. Y2KNEWSWIRE would like to respond and address this serious
question.
A fear-monger is someone who spreads fear-inducing information that has no basis. For example, a fear-monger would be someone
standing on the street in L.A. and sceaming, "The earthquake is coming today!" even if he had no evidence that it was.
On the other hand, warning people about an event on which there is an abundance of credible evidence, even if that evidence points
to a frightening conclusion, is not fear-mongering. As an example, if you were flying in a 747 and two engines exploded, and the
captain announced to the passengers, "We might crash!" would you consider that fear-mongering? Most people wouldn't. They
would consider it a legitimate warning that would give passengers time to prepare for the crash landing.
Surprisingly, some people still call this fear-mongering. They would say the passengers are better off not knowing about the
problem, since awareness only causes panic. They would say the captain was a fear-monger for warning them.
Y2KNEWSWIRE disagrees with this viewpoint. We believe that informing people of a credible threat, backed by a mountain of
legitimate evidence, qualifies as responsible journalism, not fear-mongering. And the Y2K threat is, without any doubt, backed up by
a mountain of evidence.
The Internet's largest source of that evidence is Gary North's site: garynorth.com Even if you skip over his personal
comments on each news item, just reading the news stories and the Senate testimony alone will make you acutely aware of the
evidence that tells us Y2K is a legitimate, realistic threat.
Y2KNEWSWIRE is prepared to declare the following: every intelligent, rational person will agree, after spending a minimum of 100
hours reading the evidence on Gary North's site, that Y2K is a legitimate, credible threat to modern civilization. Only the most
absurd logic or psychological denial can result in disagreement with that conclusion. The REAL question, which is debated hotly by
very intelligent people, is
how bad
the Y2K impact will be.
THE DEBATE HAS SHIFTED See, we are no longer talking about whether Y2K is real. No honest person who is familiar with the
facts would claim that Y2K will have no impact whatsoever on our civilization. What we are talking about is the LEVEL OF IMPACT
Y2K will have on our civilization. And you cannot intelligently discuss this issue without bringing up facts that are "scary." You
simply can't assess risks unless you are willing to at least mention they are possibilities.
BRING IN THE BIO LABS It is within this framework that we are currently discussing the legitimate question of whether or not bio
labs -- where scientists study highly-infectious and deadly bioliogical agents -- will become a threat to humanity if either their
internal systems are not Y2K-compliant or their power is cut off due to failures in the power grid. ASKING this question is not
fear-mongering.
Fear-mongering would be the following: "People! The bio labs have not said they are compliant, so run for your lives! We're all gonna
die!"
That was an example of baseless fear-mongering. However, to say that
we don't know
whether these labs are compliant, and to ask for any information from our readers who may know, is simply the critical first step in
getting to the answers. We can't find the answers if we are afraid to even ask the questions because we might be called
"fear-mongers." Asking the right questions is ESSENTIAL to finding out what risks we really face in regards to Y2K. And that, we
think you will agree, must be done by someone.
THE MAINSTREAM NEWS IS AFRAID TO ASK Currently, we are not aware of ANY news organization on the planet who is asking
these questions about the bio labs. Why? Because they are too afraid of being called fear-mongers. ABC is afraid, NBC is afraid,
CBS and CNN are afraid. Even Fox News is afraid of being called "radicals" for even asking these important questions.
Y2KNEWSWIRE IS NOT AFRAID.
Sometimes, it takes a small gutsy team like the Y2KNEWSWIRE people to find the truth and share it with the world. We have no
parent megacorporation to answer to, we are not affiliated with any political party, and we do not belong to any religious movement.
Nobody can apply financial pressure or blackmail us into spinning the truth. We answer to no one except our readers.
We thank you for your continued support, and we reaffirm our commitment to bringing you non-biased, fact-based evidence that
shows why the Y2K threat is real. And by doing so, we hope you will agree we are not fear-mongers. We are fact-mongers.
HERE'S WHAT WE'RE LOOKING FOR FROM READERS: Are you a computer programmer working on Y2K repairs? We'd like to
hear what you think about the whole situation. Are you being treated fairly? Are you respected, or are you being blamed for causing
the problem in the first place? Do you think the company you are working with will be ready in time, or is it way too late? If you'd like
to share your thoughts with our readers, e-mail us at tips@y2knewswire. com where you anonymity is assured.
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