The Kanjorski Meme

This is the way that memes propagate: after appearing on LiveLeak and being picked up by Zero Hedge (twice), Paul Kedrosky, and Clusterstock, it hit BoingBoing, and now it’s everywhere: Panzer, Alphaville, SAR, the Economist, you name it. I’ve been ignoring it until now, but it’s reached ubiquity, and so someone needs to start asking whether it’s true.

Basically, what happened is that Paul Kanjorski, the chairman of the House financial services subcommittee, went on C-Span and said that $550 billion was withdrawn from money-market accounts on September 15 in the space of "an hour or two", that Treasury "closed down the money accounts", and that if they hadn’t done so, "by 2 PM that afternoon $5.5-trillion would have been withdrawn".

The problem is that none of this has been reported anywhere else, and I for one can’t remember any reports of money-market funds being closed down or Treasury suspending withdrawals. Kanjorski is talking anecdotally in the context of a C-Span phone-in, and even Kedrosky describes him as "semi-coherent". So by all means let’s ask him to clarify what he meant, or ask Treasury whether there’s any truth to all this. But let’s not just keep on passing around this videoclip without trying to work out what the facts of the matter are.