Our memory is a variable quality asset. Ask any defence attorney. Eyewitness accounts of an (alleged) crime are often their way to acquittal. On forgetfulness and doubt are borne the many releases of the guilty.
Forgetting is not restricted to courtrooms and police interviews. How many economists remember the 1990s? Do they remember the nervous tensions surrounding the big, decade-ending party, the Y2K event? They do not, it seems.
My memory is particularly clear, and unusually specific. On January 1st, 2000, I was scheduled to fly from Sydney to Manila, in a Boeing 747. I was the pilot in command. The fear within the airline was not about the aeroplanes, because they’ll either work or not. If they start and get going, they’ll keep going. The uncertainty lay with all the electronic ground infrastructure it takes to co-ordinate the progress of an airline flight between the many jurisdictions involved. Primarily there is Air Traffic Control. Secondarily there are ground-based navigation aids. And thirdly are the facilities and handling equipment for passengers and freight at either end of the journey. No-one was quite sure how much of this stuff would work…nor what to do if it didn’t.
These and many other problems were forseeable, of course. The date was right there on the calendar. Whether embedded computer routines in actuators and chips would work when the year read “00” was a matter of much speculation, all of it junk.
In the US, Mr Greenspan too was in touch with this problem. Being a central banker, and this being a problem big enough to be worthy of his valuable time, he applied his rigorous analysis to it and came up with the answer. Guess. Yep. In an amazing turn of events, the Fed decided that the answer to any possible computer problems was….TADA!… more money.
Preceding the turn of the calendar, the Fed provided hitherto unprecedented amounts of “liquidity” to the banking system. The idea was simple (and ostensibly reasonable) enough – if there were big problems, especially with power grids and big industry, they would need to borrow lots of money fast. The fix for large-scale outages would necessarily involve lots of money, which the Fed deemed beyond the ken of the businesses concerned.
As anyone who woke up that morning and flew to Manila learned, there was no problem with the flip to the new century. And by no problem, I mean literally and worldwide no problem. We sailed across Australia and into Indonesian and then Filipino airspace with the usual aplomb. Of course we were talking on WW2-era radio (High Freqency) but all the ATC co-ordination worked, as did the Ninoy Aquino airport and the Manila Hotel when we got there. Well, it worked as much as it ever did.
The big day of highly anticipated problems came and went without any difficulty. And what did the Fed do? Well, nothing, as it turns out. All that money they’d provided for “the system” was still there, sloshing around. One wonders where they thought it would all go, because, like water, the cash has to go somewhere. Dollars find the path of least resistance. and that they did. Right into 2007, and the weirdness in which we find ourselves – still – in 2015.