India Launches War on Corruption, Hits Cash, Chaos Ensues

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

“Economic Shock & Awe” turns into “Nightmare Without End”

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

On Tuesday November 8, Narenda Modi, the prime minister of India, the world’s second most populous nation and Asia’s third largest economy, announced in a public address to the nation that India’s two biggest denomination notes, the 1,000 rupee and 500 rupee bills, were now worthless and would have to be replaced with newly designed bills.

That was six days ago. Since then all hell has broken loose.

Official Motives

There are plenty of reasons for the government’s action. Partly it was intended to flush out the cash hoardings of black market operators and stop the rampant corruption permeating all levels of business and government in India. It is also part of the government’s plan to thwart counterfeiters and bring more stashed currency into the banking system.

One of the biggest beneficiaries will be the nation’s nascent digital economy. Paytm, India’s largest digital wallet startup, hailed the move. “This is the golden age to be a tech entrepreneur in India. Especially a fintech one,” tweeted Vijay Shekhar Sharma, the company’s founder, whose investors include Alibaba Group Holding Ltd. “Keep the money digital.”

The coffers of both the nation’s government and banks are also expected to benefit handsomely. According to some reports, banks’ non-performing loan ratios have already shrunk in recent days as small and mid-sized businesses that had been defaulting on repayments suddenly started rushing to banks to repay the money they owed. As for the government, it hopes to boost its tax revenues from the current anemic level of 17% of GDP to somewhere closer to the OECD average of 34%.

The problem is that India is not an OECD nation and it does not have the financial logistics or architecture to accommodate such a bold move. In fact, even the world’s most advanced economies would struggle to cope with such a radical financial shake-up.

“Economic Shock and Awe”

Taken together, the 1,000 rupee bill (worth just over $14.50), and the 500 rupee bill ($7.30) account for 86% of the cash economy, in a country where over 90% of retail transactions are performed with cash. In other words, Modi’s move is the economic equivalent of “shock and awe” — the BBC’s choice of words.

The result so far has been pure chaos. Millions have converged on banks to change their now defunct bills for newly designed or lower denomination notes, only to find the banks out of cash and the ATMs empty or out of order. As the FT reports, India’s new Rs2,000 ($30) note, with which the government intends to replace some of the 22 billion currency notes scrapped on Tuesday (despite the fact the new note is double the value of the highest value nixed note), is slightly smaller than existing notes and hence incompatible with the nation’s approximately 200,000 ATMs.




Even those lucky enough to have acquired the new Rs2,000 notes are displeased, as the chronic shortage of smaller notes for change makes them illiquid, unable to be used for small purchases. Naturally, those who can, have used debit or credit cards to make purchases but even they have proven far from infallible as severs have crashed under the sheer weight of transactions.

“A Nightmare Without End”

If things are bad in India’s big cities, they’re even worse in the rural economy that supports those cities, which has ground to a near-halt in the last few days, as many residents have had to travel to neighboring cities to try to change their money, often without success.

Across vast swathes of the Indian countryside small traders and shopkeepers are struggling to maintain their cash flow while small local markets have closed for business in what the Times of India describes as “a nightmare without end.” In the village of Dalan Chapra, nestled in India’s northern hinterland, the cash crunch is forcing residents to resort to the most primitive form of exchange of all: barter.

The disruption has also hit the movement of goods, reports Bloomberg.

More than half of an estimated 9.3 million trucks under the All India Motor Transport Congress have been affected as drivers abandon vehicles mid-way into their trip after running out of cash, according to Naveen Gupta, secretary general of the group. India’s roads carry about 65 percent of the country’s freight.

Crisis Brewing

Such widespread disruption is bound to have serious macroeconomic consequences. The question is how big and for how long. Kaushik Basu, a former World Bank chief economist, believes the government has seriously underestimated the potential economic damage of such “shock therapy,” as significant quantities of both black and white money are taken out of circulation.

It’s “a very risky correction of money supply”, Mr Basu told FT. “Ordinary salaried people, retirees and small farmers who store their legitimate incomes in cash for future durable and rainy-day purchases, will not be able to change all their money for fear of harassment and not being able to explain how they got it,” he said.

“This can be very disruptive, increasing the costs of small business and trade and causing a drop in aggregate demand in the economy, thereby slowing growth.”

According to analysts at UBS, 1.2 percentage points could be shaved off India’s economic growth, which at more than 7% is currently the fastest among major nations. And that’s if cash supplies remain in disarray for just three more weeks, as Finance Minister Arun Jaitley has rather optimistically predicted. A new report warns that currency normalization may take as long as four months, which would be a long time for chaos to eat into the fabric of India. By Don Quijones, Raging Bull-Shit.

In the middle of a blossoming banking crisis, Italy confronts a question. Read…  The Global “Populist” Doom Tour Swings to Italy




Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

  63 comments for “India Launches War on Corruption, Hits Cash, Chaos Ensues

  1. Emanon
    November 15, 2016 at 11:44 pm

    This policy has been such a great success in India that a major bank now demands that Australia should do the same thing.

    http://www.zerohedge.com/news/2016-11-15/first-india-now-australia-should-abolish-big-bank-notes-according-ubs

    UBS has had more than its fair share of scandals, including a recurrent theme of money laundering:

    http://www.corp-research.org/UBS

    Methinks that they want to eliminate the competition from bags and pallets full of currency and force the drug lords to use UBS to launder their dough.

    It’s also far easier to bail-in digital money en masse than it is to steal paper bills from the wallets of millions of individuals.

  2. NotSoSure
    November 16, 2016 at 12:26 am

    The mystery deepens: http://www.zerohedge.com/news/2016-11-15/secret-world-indian-currency-printers

    “The recent decision to discontinue the Rs 500 and Rs 1000 notes and introduce the Rs 2000 notes was taken with a view to curbing financing of terrorism through the proceeds of Fake Indian Currency Notes (FICN) and use of such funds for subversive activities such as espionage, smuggling of arms, drugs and other contrabands into India, and for eliminating Black Money which casts a long shadow of parallel economy on our real economy. However, are our new currency notes printed with the involvement of the same blacklisted companies that infact were the source of fake notes to Pakistan in the first place?”

    • MC
      November 16, 2016 at 1:57 am

      Have you ever noticed it’s always about “terrorism” and “tax evasion”?

      • NotSoSure
        November 16, 2016 at 9:43 am

        Well in India’s case it happens to be true. Not everything is a big conspiracy. Heck it’s true for most countries in Asia i.e. tax evasion.

        • d
          November 16, 2016 at 6:46 pm

          For most people in South and SE Asia.

          Tax is simply a waste of money, as their British and Dutch built Colonial Infrastructure simply crumbles a little more each year.

          Modi expects rural india to pay tax, and yet like all Metropolitan Indians. He only goes to the regions when he wants their vote. And more importantly. He gives them nothing near fair value for the tax he demand’s, so they dont pay it. If people dont get a fair return for their tax, they will stop paying.

          Modi is making a big noise about BIG Black money.

          He is actually chasing the cash under the mattress in rural india, to short term recapitalize his banking system. india has been trying to force rural india to use banks, and pay bank fees, for decades, this is simply part of that.

          It wont work as the banks are to far away from the people he is trying to force to use them so he can tax them more.

          Indians haven’t trusted the rupee since independence, when the silver ones were withdrawn.

        • Robert
          November 17, 2016 at 1:21 pm

          MC is right- it’s about forcing people to use the banks or else. By flaying the poor, ostensibly in the name of rooting out corruption, Modi has provided ammunition for the very group he wishes would go away: those who believe money should be a store of value. For no one could argue before that fiat money is a store of value, and now he has bitterly demonstrated that furthermore it is a crude, if not cruel political tool as well. A man could make an honest living producing small gram-denominated gold or silver coins which would readily be accepted in trade by millions regardless of existing Indian tax and legal tender laws. The so-called economic benefits derived from currency devaluation, such as has recently occurred in Mexico, are borne on the backs of poor workers, and not their bosses, and the day they demand justice may not be as distant as the bankers desire. After all, the use of marijuana in every state which has recently decriminalized it flies in the face of existing federal law.

        • d
          November 17, 2016 at 10:16 pm

          Why are you still talking about it

          https://www.jmbullion.com/silver/silver-coins/mexican-silver-libertads/

          There are cheaper suppliers of the same items, the advantage of that particular coin, is that it has no face value.

  3. Frederick
    November 16, 2016 at 12:29 am

    Should be good for precious metals one would think

  4. Kreditanstalt
    November 16, 2016 at 12:32 am

    Haha. How many people will now TRUST the security of the 2000Rs. government bill? How long will it last?

    Barter next? Foreign currency? Who knows?

    This will teach everyone the wisdom of saving longer-term in GOLD. And not to trust any government…or government “money”…

    • MC
      November 16, 2016 at 2:21 am

      In India? You are preaching to convert.
      All the gold Europe sold over the past fifteen years to buy cheaply made expensive SUV’s was smelted in Switzerland and shipped to India. The locals just cannot get enough of the yellow stuff.

      As the present Indian government has already tried a variety of schemes to get a hold of that gold, price of the gold metal is literally skyrocketing in India: last Friday physical bullion broke the Rs 135,000/oz (over $2000/oz) barrier on the Indian market and I am genuinely surprised this hasn’t cascaded on global markets, as India is the premier buyer of physical by a fair margin. There are all sorts of crazy rumors about the price of gold having been “fixed” but I suspect the truth is much more mundane: only a minuscule fraction of the gold traded in London, Dubai and Zurich truly exists. The rest is just paper and bytes.

      • NotSoSure
        November 16, 2016 at 9:45 am

        LOL. Indian people has so much gold, they have nothing else. The water quality is poor. Heck the first priority for Modi was to provide toilets for everyone.

        What’s the use of a ton of gold if your quality of life sucks?

        • nick kelly
          November 16, 2016 at 10:30 am

          Idiotic, racist reply

        • November 16, 2016 at 12:24 pm

          Your question :

          QUOTE : “What’s the use of a ton of gold if your quality of life sucks?”

          Very good question. Part one of my answer is to adjust the outrageous nature of the question , as no Indian person, Middle Class or below, can afford to have a ton of gold. And avoirdupois pound, 12 gold ounces is worth about $24,000 roughly. So ten pounds avoirdupois is around a cool quarter million, enough for most Indians I would think. Enough for me in any case !

          Now to answer the question, having gotten rid of the outlandish ( and perhaps offensive ) word “ton” :

          Given that the elite and immoral Indian Government has destroyed the value of the $10 and $20 bill ( approximate values for easy comparison ) OVERNIGHT, any sane Indian or American or even European would want to find a “store of value” immune to Government depredations.

          Gold is one way, an ounce or a pound or even ten pounds.

          In America ten or fifty or even 100 pounds of “Junk Silver” would be the way I would recommend – – to avoid Government destruction of the green toilet paper dollar bill .

          HOW SILLY THE INDIAN GOVERNMENT IS : trying to force the people out of Gold – – by destroying the value of their worthless (toilet) paper money.

          Strange and silly.

          SnowieGeorgie

        • robt
          November 16, 2016 at 12:46 pm

          Please point which of the ‘racist’ and ‘idiotic’ statements of fact that are in error. The actions and statements are policy statements of the government.
          The tradition of Indian culture honors the value of gold, and people give gold and wear gold as portable wealth. Huge amounts of gold are in private hands and one of the recent initiatives of the government was to attempt to induce Indians to turn in their gold for interest-bearing certificates, with modest success.
          The water quality is poor because the rivers are sewers.
          The stated policy of the new government was to provide toilets for the estimated 75% of the population that had none, thus improving public health and safety by the reduction of public defecation.
          https://www.washingtonpost.com/news/worldviews/wp/2016/09/08/indias-government-is-now-shaming-people-into-using-toilets/
          http://www.zerohedge.com/news/2015-11-18/indians-refuse-give-their-gold-government-only-30-kilograms-take-part-gold-monetizat
          http://www.huffingtonpost.com/2013/03/05/india-river-pollution-sewage_n_2810213.html

        • NotSoSure
          November 16, 2016 at 1:19 pm

          Racist? Read this: http://qz.com/505276/narendra-modis-most-popular-move-so-far-sending-millions-of-indians-to-the-toilet/

          It just happens to be fact. And come on “a ton” is just a figure of speech. The problem with gold in India is obviously that the rich still has more gold than the poor. So in the end the net effect is nothing.

        • nick kelly
          November 16, 2016 at 1:34 pm

          I will gladly point out what is idiotic and obviously non-factual.

          ‘Indian people has (sic) so much gold they have nothing else’

          Of course the average Indian does not have any appreciable amount of gold, while the comment implies that not only does he have it, he has chosen it over a toilet.

        • Gaz.
          November 16, 2016 at 2:34 pm

          @SnowieGeorgie

          I take it that is an Indian avoirdupois pound mine has sixteen ounces; now twelve troy ounces…………….. It’s an imperfect world and I offer an observation and no criticism.

        • November 16, 2016 at 5:00 pm

          THANKS GAZ

          Getting old, I am. Like Yoda.

          I jumbled the meanings of Troy and Avoirdupois in mine tiny mind — a sign of advancing age.

          My only defense for such leave of sense is that I do not use those odd terms in my everyday life, and thus was more susceptible to confusing them. And confuse them I did !

          Be more careful I will next time!

          Thanks

          SnowieGeorgie

        • robt
          November 16, 2016 at 11:14 pm

          nick kelly, “Of course the average Indian does not have any appreciable amount of gold, while the comment implies that not only does he have it, he has chosen it over a toilet.”

          Collectively the Indian population holds an enormous quantity of gold, estimated at 1 Trillion dollars or 18,000 tonnes (2011 valuation, now maybe 750 Billion, or an average of a few thousand dollars per family, even if they’re often quite poor they will have some); getting that gold was what the program of the government hoped to achieve when they offered ‘gold bonds’ for the gold. Of course, offering paper for gold failed miserably – the people just don’t trust paper, for good reason.
          http://archive.indianexpress.com/news/indians-hold-gold-worth–1-trillion/829619/
          And yes, the government has placed billboards all over the country telling people (and encouraging their children to shame them into) using a toilet instead of ‘the wild’, with the wild being defined as everywhere from a field to a street.
          Words have meaning, and racist is perhaps the most overused word in the current Western vocabulary, until it has become meaningless.

  5. 2banana
    November 16, 2016 at 12:54 am

    Whst other insane efforts does a government go to when they can’t trust their citizens with a $7.30 Bill of fiat money?

    To go after corruption and counterfeiters.

    I can think of dozens of better ways to win those battles.

    The US used to have $1000 bills. A $20 gold coin was a month wages.

    We are not that far off from India.

  6. M Singh
    November 16, 2016 at 1:37 am

    Mr Basus’ comment that “Ordinary salaried people, retirees and small farmers who store their legitimate incomes in cash for future durable and rainy-day purchases, will not be able to change all their money for fear of harassment and not being able to explain how they got it,” is facetious.

    Rs 2,50,000.00, a large amount for a low to mid income person to have saved in cash, can be deposited with no questions asked. Any amount above that is subject to scrutiny. So if your money has a clean trail, you still do not have any thing to worry about. Basically, it’s emptied the war chests of the real estate mafia, who dominate political funding.

    • shriya
      November 17, 2016 at 1:17 am

      Thats a foolish comment. First of all 2,50,000 is not a big sum in South India. Many house wives of mid size farmers or school teachers store it. They sometimes invest in chitfunds so keep cash at home. please Dont generalize

      • M Singh
        November 19, 2016 at 1:07 am

        The people who have money in chit funds, that is clean, can deposit it. Chit Funds though legal, are used to clean funny money; the prime example is the Trinamool Congress who are in power in Bengal. Their leader Mamta Banerjee is making the maximum noise about this scheme. If I may add, demonitisation has also emptied out the war chests of the insurgents in the J&K, NE & elsewhere.

  7. Lune
    November 16, 2016 at 1:44 am

    I happen to be in India right now, so here’s my on the ground reporting:

    The chaos is way overblown in the media. I’ve been in big cities and rural towns. Shops are still open, business is still being transacted. The only real noticeable change are the big lines in front of banks and ATMs. I stood in line for 1 hour and got Rs. 4000 exchanged (the current limit). They asked for photo ID, and I gave them my US drivers license. This was to prevent me from going to multiple banks. Also, to force people with black money to disclose their holdings if they want to exchange or deposit it.

    Despite the inconvenience and temporary shortage of small bills, this move is highly popular with the average Indian on the street (and me :) because it is removing a ton of black money from the economy. There are reports in the media of people burning large stacks of 1000 rupee notes, and of notes floating in the Ganges as people dump these now worthless notes. That’s a good thing because those were all undocumented currency.

    The bottomline is that this is a drastic but manageable move. It was necessarily chaotic because it was kept under wraps to prevent connected criminals from being tipped off and exchanging their money beforehand. Indeed, the speculation is that only the prime minister and a few RBI (India’s central bank) officials knew beforehand. Not even the finance minister.

    Furthermore, if your money is all legit, you will be able to exchange all of it over the next month. This is just a temporary shortage of currency notes. Only if your money is undocumented are you unable to exchange it (or more accurately, if you exchange it, you’ll be forced to disclose it, which means you could face penalties and jail time for tax evasion).

    Now this will all be for nothing if there’s no followup measures to prevent the underground economy from restarting. Also, if they want to go after the really big fish, they need to go after overseas accounts. But this is a necessary first step and most Indians seem to support it and take the inconvenience in stride.

    • marty
      November 16, 2016 at 4:35 am

      Black market = free market. In many places in the world, the black market is the only way people can survive.

      There is no way that criminals are hoarding their ill-gotten gains with $7 bills. Doesn’t pass the sniff test. Also, the fact that the people are brainwashed into thinking this is a good thing doesn’t make it so.

      There’s more here than meets the eye…

      • milking institute
        November 16, 2016 at 9:43 am

        I can just imagine the Army of millions of “tax inspectors” descending on rural India to investigate the “legitimacy” of the little shopkeepers cash deposits. from what i hear,they will be able to go back years to dig into peoples lives. this government can’t run a damn railway system for crying out loud. many indians that own gold will be sleeping well tonight. BTW private holdings of gold in India is estimated at between 10 and 20 thousand metric tonnes,more than the combined reserves of many central banks. not sure who advised Modi that this was a good idea….

      • Lune
        November 17, 2016 at 2:04 am

        In India black market has very little to do with free markets. It’s primarily completely legal transactions that are done under the radar purely for tax evasion. While there are some black markets for regulated transactions like gold smuggling and large currency exchange, the vast majority of black money in India is from legal transactions like real estate that are underreported to avoid taxes.

        And yes, believe it or not, people store massive stacks of RS. 1000 notes totaling millions of dollars (equivalent) in large lockers in banks. In fact one of the earlier initiatives to curb black money was to limit the number of lockers people could rent in banks. Because people would rent a dozen of the largest lockers a bank had to store their unreported cash.

        The main illegal transactions conducted in the black economy is bribing officials. Hardly something to be supported under the guise of free markets.

        • Marty
          November 17, 2016 at 8:39 pm

          And as I mentioned above, there is NO WAY that corruption is the real excuse for targeting $7 bills.

    • Tim
      November 16, 2016 at 7:59 am

      Black money are still money and removing them will hurt economy in short to mid term.

      • Lune
        November 17, 2016 at 2:15 am

        Removing it from the economy only hurts if it was circulating. Most of this black money was sitting in bank lockers. It was doing nothing before anyway.

        That’s the real problem with black money. Rather than recirculating back into the economy via bank deposits, investments, etc. It just sat there.

        • marty
          November 17, 2016 at 8:41 pm

          Money saved, in whatever form, is saved for a reason. It’s function is very important. The Keynesian notion that all money needs to be endlessly spent for the “economy to grow” is simply false.

    • jerry
      November 16, 2016 at 11:13 am

      In the days of freedom, the onus was always on the state to prove a citizen’s guilt. Now in the new normal the individual only has to be accused by the state of a crime and now the citizen has to prove his innocence. Simply being in possession of a large or not large amount of money automatically makes you a drug dealing money launderer.
      I wish people would read more history rather than watching the XFactor or Football or that funny kitty vid on YouTube.
      Wake up folks, the west is broke and the state is now turning on their own citizens for cash, this is text book stuff. The Romans did it and so did FDR, soon there will be capital restrictions and taxes on static assets like family homes. You are about to witness the erosion of your liberty and rights.

    • nick kelly
      November 16, 2016 at 11:33 am

      If money is floating in the Ganges why doesn’t a guy who only wants to deposit the allowed no-questions amount fish it out?
      Or if you are not in a position to deposit all your money, why not give it to a poor relative?

      • Lune
        November 17, 2016 at 2:09 am

        I wouldn’t be surprised if some people do wade in and go bobbing for rupees :)

        If you have poor relatives, you’ve probably already roped them in to standing in the banks with you to beat the per person exchange limits. And there has been a surge in donations to temples and other non profits. But many people who have amassed massive unreported wealth over the years are simply pissed and would rather burn it than see anyone benefit from it.

  8. d
    November 16, 2016 at 1:46 am

    This is simply Government extortion.

    Modi is banking on the fact, that a large volume of this money, will never be redeemed, and then he can simply show it as a liability, he will never have to settle on his balance sheet.

    Then in due course remove it.

    India has the largest annual private consumption of gold and one is of the few nations, that still has a lucrative gold smuggling industry.

    Indians dont keep their money in banks as they dont trust them.

    Now they dont trust the money either.

    Modis action’s will not have the long term effect he wants and he may not get reelected after this.

    Electorates do not have long memory’s, except for thing like this, which they never forget.

    Just like FDR’s gold theft.

    Any body with money remembers, or knows about EO 6102, it was only 82 + years ago.

    Those shiny silver bars and coins of mine, look real good today.

  9. Sidharth
    November 16, 2016 at 2:00 am

    Very biased news article. As Lune has indicated above, there is NO chaos. Indians have wholeheartedly welcomed the government move. There is some inconvenience standing in queues but it is the first time politicians and corrupt bureaucrats have been taken to task.

  10. Tom Kauser
    November 16, 2016 at 2:19 am

    Jan. 22 2017!

  11. Guido
    November 16, 2016 at 2:57 am

    Reminds me of the announcement on a Hindi show on TV a decade ago. It was quite common to see illegal copies of new movie releases hit the shelves here in US a few days before the actual movie was released in India.

    A director decided to put an end to this kind of piracy. The first week, he went on TV and explained that only DVDs that had a green strip at the bottom were legit. The second week, he explained that people had copied the green strip so any DVD that had a green strip was considered pirated. He then suggested we look for a blue strip. The following week, he was back explaining that we should not buy any DVD of his movie that sported either a green or blue strip but we should instead buy one with yellow strip as pirates had copied the blue strip as well. A couple of weeks later, he gave up.

    Could this banning of large denominations be the green strip step? Will we see this movie again soon? Won’t people hoard all over again with the new currency? Isn’t this a systemic problem and the suggested solution a scrubbing of the symptoms?

    • d
      November 16, 2016 at 3:49 am

      Dont laugh at it, watch it and learn.

      Unless your in one of a small handful of stable currency that does not includ e the Eur (Remember the 500 withdrawal) its probably coming to a Fiat currency near you, SOON.

      Modis mistake was to do 2 notes, at the same time.

      What he should have done, was stop further issues of both, but make only 1 worthless immediately.

      20/20 makes life easy.

      • frederick
        November 20, 2016 at 12:38 am

        The 500 Euro note hasnt been removed yet d Not until 2018 is what Ive heard

        • d
          November 20, 2016 at 1:10 am

          No it hasnt been removed.

          Simply no longer issued, and any of them that end up in banks, go to the local CB. Where they are either held or destroyed.

          In the longer term. I expect them to meet the fate of other old notes, that can now only be redeemed, by filling out a very intrusive form, at the reserve bank.

          They have deliberately driven the price of gold, to untenable, and unworkable levels, and now they are trying to replace their worthless fiat, with an even more worthless plastic card, they can deactivate at will.

          This level of Dictatorial Communist/Fascist blindness, would be funny, if it was so stupidly sad.

          In Berlin, in late 1944, American’s smoked Tailor-made cigarettes.

          The Germans had lots of them. They however, didn’t ever, smoke them.

  12. NoRush
    November 16, 2016 at 9:00 am

    Does a pocket or bank account full of IOU’s make you rich?
    I’m not sure that the past tradition of accumulating them is as motivating as it used to be.

  13. william charles
    November 16, 2016 at 9:47 am

    Central banks worldwide and the elite who run them have a desire for digital currency. Eliminating large denomination bills is a way to prevent hoarding as people have less confidence in banks holding their money especially at low to negative interest rates. It’s a step to transition into electronic currency. Governments are desperate for cash, they need to control where and how you move your money, which is none of their business, save illegal activity, which is their excuse to push through what they have mismanaged in their brain dead policy making. In essence they have a desire to crush individual independent freedom in trade which is one of the tenets of Statism. Problem is Statism is collapsing worldwide as people confidence in governments is dropping like an anvil.

  14. Petunia
    November 16, 2016 at 9:58 am

    I have to admit I didn’t think the Indian govt would do it. But having said that, I am not surprised that they did it badly. This move doesn’t hurt the thugs, they convert their money to more marketable assets. This hurts the average working family saving for their daughter’s dowry. While I won’t defend the dowry system, it nevertheless drains more savings from families with daughters.

    It is an asset grab anyway you look at it. Another wealth transfer from the poor to the rich. I wonder where they got the idea?

    • nick kelly
      November 16, 2016 at 10:50 am

      The ‘idea’ is as old as life. It’s called the law of the jungle. There has never been a shortage of wealth transfers from the poor to the rich.
      In the past the confiscation was physical and total, the poor person became the rich person’s property

      The test of a civilization, a human construct, is the extent to which it prevents this.

      However the idea that humans are equal is an import to India, as it is to most of the world.

      • Chicken
        November 16, 2016 at 11:01 am

        “There has never been a shortage of wealth transfers from the poor to the rich.”

        And guess what, 99% of those are all cleverly disguised as a large majority is easily duped.

      • Petunia
        November 16, 2016 at 1:17 pm

        In India women are still not equal regardless of the law. With the caste system on top of the inequality, the western concept of equality is nonexistent.

        • nick kelly
          November 16, 2016 at 1:50 pm

          Agree. It is an import still being digested.
          When the Brits ruled India they had a non-culturally sensitive approach to ‘suttee’ or (live) widow burning along with the deceased husband: ‘when men burn women we hang them’
          Ghandi led the indigenous struggle against caste but it has a ways to go. As of course does race in the US and elsewhere.

          I think one nudge in the right direction would be for BBC, CNN etc. to refuse to interview women wearing caste marks.

        • Petunia
          November 16, 2016 at 2:02 pm

          NK,

          Having been a techie and a New Yorker, I have always had exposure to Indians. One of the issues I have with immigration is that in DC they think that all people who come to America suddenly become Americanized. I can tell you this is not so in most immigrant communities, the caste system is alive and well in the Indian American community in America.

    • Frederick
      November 20, 2016 at 12:40 am

      Mr Yellen? Would be my guess or perhaps Mr Dragon in the EU

  15. Chicken
    November 16, 2016 at 10:55 am

    Good thing I don’t have any more stacks of Rs 500 or Rs 1000 in my print room, it’s all mostly just pallets of Rs10,000

  16. Greatful again
    November 16, 2016 at 11:06 am

    Most Indians don’t have that kind of money. So they don’t care. But a gov move like this should send a message to the public that if they can do what they want, where will they stop?

    • Greatful again
      November 16, 2016 at 11:12 am

      The INR is currently trading at 68 to the USD. When I was in India back in June of 2011, it was about 44 to the USD. The peso is securely in the 20s now. GPB and euro heading south.
      The DXY just hit a multi year high. Look around, the USD is killing it.

    • Petunia
      November 16, 2016 at 1:22 pm

      The Indian govt bureaucracy is the middle class in India. A war on them and other professionals is madness. I can already see this turning into a nasty political battle. Add another pissed off democracy to the list.

  17. Stu
    November 16, 2016 at 11:24 am

    The biggest corrupt in India is government.

  18. Greatful again
    November 16, 2016 at 12:11 pm

    Idea is catching on. UBS is recommending that the Australians get rid of $100 and $50 notes.

  19. Kevin Beck
    November 16, 2016 at 1:06 pm

    This isn’t a “War on Corruption,” as all these governments say. The truth is, it’s a war on the citizens.

    In the United States, we have to put up with the yammerings from some mental midget/Harvard professor Kenneth Rogoff, who has been plotting this for decades.

    Corruption is NOT what you can do to spite the government tax collectors; it’s what the government can get away with against its citizens.

    • Chicken
      November 16, 2016 at 1:29 pm

      You’re right, for instance with the FED taking over capital markets by distorting the price discovery mechanism, Wall Street is able to take full advantage. On top of the crisis they caused as a result of gambling, they were able to borrow hundreds of billions to use against the system of price discovery while is was severely distorted to the downside, which I’d argue they arranged by duping their customers into panic.

      The greatest wealth transfer in history went unfettered, it was in fact aided and abetted by the FED’s bubble-blowing market distortions.

      • Greatful again
        November 16, 2016 at 1:50 pm

        I just heard the Fed now holds 20% of all outstanding MBS’s.

        • Chicken
          November 16, 2016 at 8:46 pm

          Everything has just become more convoluted as time has passed, nothing has really been resolved. Wonder what the FED intends on doing with those MBS’s, give them free of charge to 1-Bank probably?

    • Frederick
      November 20, 2016 at 12:43 am

      VERY true Kevin its all a bunch of hooey and the rejection of the MSMedia is proof people are waking up albeit slowly

  20. Albert E
    November 16, 2016 at 2:56 pm

    Surely this is purely a manifestation of the multipolar war on cash in preparation for the global financial crisis and beyond. Rhetorical question folks. Bye y’all…

    • Marty
      November 17, 2016 at 8:43 pm

      Exactly. !!!

Leave a Reply

Your email address will not be published. Required fields are marked *