Markets just hate uncertainty. Better buy some bonds. Part of this uncertainty has nothing to do with computers. The year 2000 has an almost mystical resonance for many people, even though it's an absolutely arbitrary marker. Every nut case in the world using a Gregorian calendar is going to come out of the closet to celebrate the end of the millennium in their own special way, whatever that might be.
Uncertainty is bad.
There are lots of possible reasons for deflation. The two biggies are lack of liquidity and overcapacity. The fed can help the liquidity situation by loosening monetary policy, i.e. print more money and lower interest rates. The fed has resisted this because the old men on the Federal Reserve Board are still terrified of inflation. The truth is that more than half of all U.S. currency in circulation is outside the U.S. borders acting as a defacto global currency and therefore can't contribute to inflation here at home.