I saw this story that’s making it’s way around the InterTubes that, if true, is probably the scariest thing I have ever seen. LiveLeak has the story. Basically there was a run on the banks in mid-September and the Fed tried to intervene *unsuccessfully*! From the video (starting about 2:15):
On Thursday (Sept 18), at 11AM the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn’t be further panic out there.
If they had not done that, their estimation is that by 2PM that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. Now we talked at that time about what would have happened. It would have been the end of our economic system and our political system as we know it.
Whoa! I remember the guarantee being announced, but the rest is a surprise. I suppose the Fed decided that telling the real story would be the equivalent of yelling “fire” in a crowded theater. Still, waiting 4 months to “let us know,” particularly when we had an election just a few weeks later is concerning.