Twenty years ago, an item of fake news spread across the Web, causing tens of thousands of companies to waste as hundreds of billions of dollars which in turn contributed to a collapse of the economy.

That event is important today because the same thing could easily happen now.

Before getting started, though, I give you fair warning. This is a much longer post than usual and it's pretty detailed. Also the events I describe are based upon my memory of them. I'd try to find links to the various articles, not all that much of the 1997 Internet remains today to be linked to, frankly.

The Root of the Problem

So let's get started. In 1997, an increasing number of alarming articles started appearing in trade magazines and later in the mainstream press about the "Y2K problem." Since some readers were children when all this happened, a little background might be helpful.

Back in the 1960, computer memory was expensive, so expensive that programmers did everything they could to use as little as possible. As a result, many programs represented the year with two bytes ("66") rather than four. ("1966.")

At the time, few programmers were thinking about the year 2000, which was far in the future. However, the two byte representation was a problem when the century turned over, a "99" would turn into "00."

When that happened, the program would assume that "00" meant "1900," thereby screwing up things like calculating the expiration dates on a credit card. This was a real problem; I know because it happened to one of my credit cards.

The Disaster Scenario

While there had for decades been talk about the Y2K bug and speculation about the problems it might cause, in 1997 the topic suddenly became white hot, fueled mostly by articles posted on the Internet, which was then still rather new.

According to these articles, when the year 2000 came, the Y2K bug would result in a huge, worldwide disaster. Wall Street's financial systems would all crash. Power failures would black out most of the world. Airplanes would fall out of sky. Cars would stop running.

How bad was it going to be?

Well, a running poll of twenty Y2K experts estimated the "seriousness" of the disaster to be in the range of "8" to "9" on a scale from 0 (representing "absolutely no concern") to 10 (representing "major worldwide social, economic and technological disruptions.)"

So the answer was: it's a big problem that will have a big impact, even though (as few noticed at the time) no actual natural disaster, world war, pandemic or economic collapse in modern times could have scored higher than a "5" on that scale.

Anyway, the story of an impending Y2K disaster quickly spread from the fringe websites into the business and mainstream press.

At the time, I was a freelance investigative reporter for Upside magazine, a high-tech journal that, alas, is no longer published. Since I was one of their top writers, the editor asked me to write a "how bad will it really be?" story.

What I Found Out

Initially, it seemed like a pretty straightforward job: interview the experts and write a summary of what they said. However, the more I read the existing stories about the Y2K disasters, the fishier they started to sound.

There was a "tone" to these stories and in the things that the "experts" were saying that reminded me of the "end of the world" predictions that religious groups periodically issue.

Indeed, as I looked deeper into the story, I discovered that many of the earliest articles about Y2K disasters had been penned by people who were also predicting that the biblical "end times" were near.

For example, the website that had the most Y2K links belonged to a named Gary North, who belonged to a Christian cult that believes that world governments should adhere Old Testament laws and which preaches that the end of the world is nigh.

With my bullsh*t detector suitably raised, I started looking into the evidence that the Y2K bug would cause disasters. I quickly discovered it was seriously lacking.

For example, a frequently-cited "proof" that Y2K disasters would happen was an anecdote about a power plant had moved its clocks forward, causing a power shutdown. This anecdote appeared everywhere, including in Time magazine and even Scientific American.

However, I quickly noticed that the anecdote was never linked back to a news story and that the location of the event kept changing. After a great deal of digging, I was finally able to locate the source of the anecdote: a power plant in Australia that had experienced an outage due to a severed cable.

The power plant failure wasn't Y2K-related at all. It was an urban myth.

I Dig Deeper

Another problem with the Y2K disaster scenario is that it didn't really make sense from a technical perspective. According to the articles and experts, the disasters would result primarily from two phenomena: 1) cascading faults and 2) embedded systems.

According to the "cascading faults" theory, once a program encounters the Y2K bug, it cause other programs connected to it to fail as well, thus bringing down the entire system.

But programs don't work like that. If one program fails, other programs continue to run. If one program passes bad data (like a bad year on date record), the other programs don't stop working; they just error out the piece of data.

In other words, faults don't cascade, so no disasters.

The other source of a Y2K disaster were "embedded systems," pieces of computer infrastructure whose programming was inside the chips themselves rather than in a piece of software that could be updated.

Embedded systems were thought to be crucial to power plants, utilities, avionics, etc. and thus entailed a great risk of failure. That's why planes would fall out of the sky, utilities would stop functioning, cars would stop running, etc.

However, anyone who has programmed chips directly knows that only an idiot would use a calendar date to track the passage of time on a piece of hardware. Setting a counter to track elapsed time is absurdly easy in any chip.

In other words, embedded systems were unlikely to fail, so no disasters.

I Publish My Findings

Rather than the "how bad will it be" article the editors had envisioned, my article said that Y2K disasters were unlikely and the the problem was being completely overblown.

Upside was immediately deluged with dozens of furious letters demanding that I be fired and even thrown in jail because my article had "endangered countless lives" by casting doubt on absolute necessity of doing everything possible to save the world from the Y2K disaster.

It was insane.

Because I was one of only a very few journalists who were pooh-poohing the threat, I became a celebrity of sorts, making multiple appearances on cable news talk shows, trying to be the voice of reason in a sea of accelerating crazy.

I might as well have not bothered, because the the Y2K disaster meme continued to grow and soon became a national obsession.

The High-Tech Firms Weigh In

Originally, high-tech firms like IBM, EDS and Microsoft had been publicly skeptical, issuing "this really isn't a problem folks" statements. However, as the panic gathered steam, businesses started ordering new equipment and software upgrades to avoid the disaster.

The high tech firms jumped on the bandwagon big time. As I recall, Microsoft slyly recommended the wholesale replacement of all corporate PCs "just in case," even though Windows had been programmed long after anybody used two bytes to represent a date.

Not to be outdone, the high-tech research firms (like Gartner and Forrester) launched Y2K services where companies could buy special reports to update them on the most pressing Y2K issues.

The high-tech researchers started competing for customers by making increasing dire predictions of of the financial damage Y2K would cause. As I recall, the bidding got up to several trillion dollars.

The Fateful Day Approaches

Meanwhile, the U.S. government got involved, spending $56 million on a "Y2K Preparedness Center" that would be ready to step in and help when the disaster struck. Many states funded similar programs.

Panic reigned among the general populace. Sales of survival gear and dehydrated food spiked upwards. In one Utah town, a group of survivalists stole a water truck (so they'd have water to sell after the crash), resulting in a running gun battle and several deaths.

As the fateful day approached, people all over the country emptied out cash machines to make certain they'd have money to spend after the big crash.

One cable news station set up a 24-hour vigil to track the changeover from where it would start (in Australia) until it reached the United States, promising to report on the disasters as they occurred.

What Happened

Nothing. The year 2000 dawned without any disasters.

Suddenly the high-tech vendors, analysts, media people, government, and the executives who'd invested big to "fix" the Y2K problem were faced with the grim reality that they'd been both dead wrong and dead stupid.

Now what?

They had to find a way to wipe the egg off their collective faces.

Religious doomsday cults seldom break up when the world doesn't come to an end as predicted. Instead, they claim that the world didn't end because "God answered our prayers!"

The same thing happened with Y2K. The drum-beaters and their many dupes collectively decided to claim that Y2K didn't result in the end of the world as we know it because "We fixed all the bugs!"

That, of course, was total nonsense.

Why It Wasn't "Fixed"

If the Y2K problem had been anywhere near as dire as they were predicting, the idea that ALL the bugs could be fixed in time is patently absurd. It would be the one time in history that a complex IT project (in this case arguably the most complex IT project of all time) was completed on time and with perfect accuracy. And if you know anything about IT projects, you know that the probability of that happening is exactly zero.

More significantly, the Y2K mania--and the IT spending surrounding it--mostly took place in the United States and Western Europe. Other parts of the world, like Russia, did nothing to prepare. And yet there no Y2K disasters in the regions that had ignored it.

So, yes, the Y2K disaster scenario was BS from top to bottom.

Even so, the "We fixed all the bugs" story--as lame as it was--allowed everyone involved in the debacle to put the whole thing behind them.

In the end, nobody was ever held to account. In fact, some of the most rabid Y2K promoters are still regularly quoted in the media as experts, although they no longer include their Y2K predictions in their lists of achievements.

What It All Means

The Y2K disaster hoax would only be a testament to human stupidity if it weren't for the fact that it had major economic consequences and thus provides a warning for the possible impact of fake news in the future.

Immediately prior to Y2K, sales of computer hardware and software spiked sharply up and then, after Y2K happened, dropped suddenly downward. Companies largely stopped buying high tech because they'd over-bought in preparation for Y2K.

The plummeting sales in high tech sales helped burst the "dot-com" bubble, which in turn caused the stock market to crash.It took almost a decade for the economy to recover.

To summarize, in 1997 the Internet, fueled by doomsday thinking and an overly-gullible press, facilitated the spread of a "fake news" story that wasted hundreds of billions of dollars and damaged the world economy.

Thus the great Y2K hoax reminds us that: