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Two weeks ago, India’s Prime Minister Narendra Modi demonetised an estimated 86% of rupees in circulation, offering conversion into a bank account or into smaller currency notes until 31 December, after which these notes will have no redemption value. Together with forgeries in circulation, it could be over 90% of all circulating money.
The terms of redemption are so inconvenient for anyone other than black-marketeers, that for all purposes $50bn equivalent of rupees have been eliminated from the economy at a stroke, pending the introduction of new currency notes. The sadness in all this is that Modi should have foreseen the extent of the disruption to the poor and rural communities, but has obviously forgotten the hard lessons of life learned in his youth as a lowly chai wallah.
It could be that the Reserve Bank went along with it as a government puppet, consoling itself with the thought it would be a good way to write off obligations, believing a significant quantity of notes is likely never to be redeemed by black-marketeers and tax evaders. It effectively reduces the central bank’s obligations to the private sector at the expense of those the state likes least. However, the $10-20bn equivalent the state will make from it is less important than the disruptive economic effect and the likely impact on the rupee’s future purchasing power.
The purpose of this article is to look at the economic consequences of Modi’s action. Initial estimates by western macroeconomists of the effect on GDP seems to be benigni. It could be because their contacts in India are typically the more highly-paid city bourgeoisie, who rarely spend cash except for tips, using bank and credit cards more normally for everyday purchases.
These people would almost certainly welcome moves to bring illegal trading under control and extend the income tax base, playing down the negatives. However, the cash immediately removed amounts to about 2.5% of GDP, eventually to be replaced at an unspecified time in the future by the new notes bearing a portrait of the Mahatma. But while these notes are shortly to become available, it could take months to convert ATMs and ensure their widespread availability.
Just this week Norway has jumped aboard the cashless society agenda with DNB, the country’s largest bank, calling for a total end to cash.
The story only sounds shocking only to people who haven’t heard the similar stories from Sweden or Denmark or India or Israel or any of the dozens of other countries whose banksters and (bankster-controlled) governments have openly lusted after a world of completely trackable, completely bank-controlled transactions.
Corbett Reporteers will be no stranger to the war on cash. I’ve made videos discussing it, conducted interviews about it, written articles examining it and dissected it on the radio. The war has been waged through mainstream propaganda outlets, TV advertisements and even children’s games.
We’ve heard cash is dirtied by drug dealing, tarnished by terrorism, tainted by tax evasion (heaven forbid!) and just plain dirty. Not to mention sooooo outdated.
originally posted by: Substracto
A way to finally enforce the chip?
originally posted by: annoyedpharmacist
a reply to: JesusXst
A cashless society is scary as hell. Basically the government would be able to monitor EVERYTHING you buy and sell with no exceptions. Hell, to even participate in the marketplace selling things, you would need a chip reader or card reader that would report everything to the central government......scary stuff.
If this were ever to take place, it would open up a HUGE black market for regular items for people who dont want the government in their business. Bartering with precious metals or trade of services and such.
originally posted by: Tranceopticalinclined
It will happen and it will be the fact that by signing up, you'll get your " national income ".
The digital age is here, as someone who has been working with bitcoin and other altcoins for the last 4 years, I see so many implications of an electronic currency that it's amazing.
We really can have a national income and we can make the corporations and other companies foot the bill, by buying data and extra digital resources hosted on the very altcoins we'd use.
If you don't want gooberment knowing what you're buying, I'm sure giftcards will still remain, they don't track like you're currency would.
Also got to remember, for every thing we'd be tracked, the government, elites and such would be tracked too, we'd even have a better accountability for voting.