India's Central Bank Governor: "International Monetary Cooperation Has Broken Down"

Tyler Durden's picture

India's recently crowned central bank head (and predecessor of the IMF's Nostradamal Olivier Blanchard), Raghuram Rajan, has not had it easy since taking over India's printer: with inflation through the roof, and only so much scapegoating of gold as the root of all of India's evils, Rajan announced an unexpected 50 bps interest rate hike two days ago in an attempt to preempt the massive EM capital flight that has roundhoused Turkey, South Africa, Hungary, Argentina and most other current account deficit emerging markets. Whether he succeeds in keeping India away from the EM maelstrom will be unveiled in the coming days, although if last summer is any indication, the INR has a long way to fall.

Hinting that the worst is yet to come, was none other than Rajan himself, who yesterday in an interview in Mumbai with Bloomberg TV India, said that "international monetary cooperation has broken down." Of course, when the Fed was monetizing $85 billion each and every month and stocks could only go up, nobody had a complaint about any cooperation, be it monetary or international. However, a 4% drop in the S&P from its all time high... and everyone begins to panic.

The reason for Rajan's displeasure is because he believes that the DMs owe the EMs a favor: "Industrial countries have to play a part in restoring that, and they can’t at this point wash their hands off and say we’ll do what we need to and you do the adjustment."Sorry Raghu - Bernanke hightailed it out of here and as Citi's Steven Englander pointed out yesterday, left you "to twist in the wind." Feel free to submit your thoughts on the matter in the overflowing complaint box in the Marriner Eccles lobby.

Instead of doing this, however, Rajan continued complaining to Bloomberg:

“Fortunately the IMF has stopped giving this as its mantra, but you hear from the industrial countries: We’ll do what we have to do, the markets will adjust and you can decide what you want to do,” Rajan said. “We need better cooperation and unfortunately that’s not been forthcoming so far.”


Rajan said yesterday developed countries might not like adjustments emerging markets take to cope with the outflows, without elaborating on specific measures. His surprise Jan. 28 move to raise the benchmark repurchase rate by a quarter point - - adding to increases of 50 basis points since he took over the Reserve Bank of India in September -- was to stem consumer-price inflation running at close to 10 percent, he said.


“In an environment when there is external turmoil, we have to get our house in order and we can’t postpone that,” Rajan said. “So a collateral benefit of getting inflation down is that you also strengthen the belief in the value of the rupee.”

“When there is huge outside turmoil, even today post the Federal Reserve withdrawing stimulus further, it is extremely important that we both be seen on the same page."

You know - this is truly wonderful: for once a central banker admits that his peers are on the verge of losing control of the globe - of course not in those words as the result would be sheer panic upon the realization that central bankers are just as clueless as everyone else - because while conducting central planning in one country is somewhat feasible for a period of time, doing so across every country across currencies, and capital markets, is impossible. And the Indian knows this.

He also knows that in a worst case scenario, the Indian Rupee will crash and burn and make last year's record devaluation of the INR seem like breakfast at Gideon Gono's. Which means that doing the right thing would mean allowing the people - his people - to preserve their wealth in the only real currency that will withstand whatever Emerging Market collapse may be headed this way. Gold.

Instead, what did the Indian Central Bank do? This.

  • Jan 21 - The government raises the gold import duty by 2% to 6%.
  • Jan 22 - The government more than doubles the duty on raw gold to 5%.
  • Jan 30 - Finance Minister P. Chidambaram says there are no plans for additional taxes or curbs on gold imports.
  • Feb 1 - The Reserve Bank of India (RBI) plans to introduce three or four gold-linked products in the next few months.
  • Feb 6 - The RBI says it would consider imposing value and quantity restrictions on gold imports by banks.
  • Feb 14 - The central bank relaxes rules on gold deposit schemes offered by banks by allowing lenders to offer the products with shorter maturities.
  • Feb 20 - The Trade Ministry recommends suspending cheaper gold jewellery imports from Thailand.
  • Feb 28 - India keeps its gold import duty unchanged in its annual national budget, defying industry expectations.
  • Feb 28 - India proposes a transaction tax of 0.01% on nonagricultural futures contracts, including for precious metals.
  • March 1 - The Finance Minister appeals to people not to buy so much gold.
  • March 18 - The Reserve Bank of India says it is examining banks that sell gold coins and wealth management products to identify "systemic issues", with a view to closing any legal loopholes.
  • April 2 - The Finance Ministry suggests it is unlikely to raise the import tax on gold further to avoid smuggling and would instead introduce inflation-indexed instruments.
  • May 3 - The RBI restricts the import of gold on a consignment basis by banks.
  • June 3 - The Finance Minister says India cannot afford high levels of gold imports and may review its import policy.
  • June 5 - India hikes the gold import duty by a third, to 8%.
  • June 21 - Reliance Capital halts gold sales and investments in its gold-backed funds.
  • June 24 - India's biggest jewellers' association asks members to stop selling gold bars and coins, about 35% of their business.
  • July 10 - India's jewellers announce they might continue a voluntary ban on sales of gold coins and bars for six months.
  • July 22 - The RBI moves to tighten gold imports again, making them dependent on export volumes, but offers relief to domestic sellers by lifting restrictions on credit deals.
  • July 31 - India hopes to contain gold imports well below the 845 tonnes that were shipped last year, the Finance Minister says.
  • Aug 13 - India hikes the import duty on gold for a third time in 2013, to 10%. Duties for silver and platinum are also increased to 10%. The customs duty on gold ore bars, ore, and concentrate are increased to 8% from 6%.
  • Aug 14 - India turns the screws on gold buying again, banning imports of coins and medallions and making domestic buyers pay cash.
  • Aug 29 -  India considers plan to allow commercial banks to buy gold direct from ordinary citizens
  • Sept 19 - India hikes import duty on gold jewerly to 15%

And so on.

So thank you for your fake concern Raghuram, but if you really wanted to help your people when the hammer hits, you would lift all capital controls on gold now, and allow your population to preserve their wealth in the only way they have known for the past two thousand years - by converting it into the barabrous relic. And since you won't, enjoy reaping what you and your demented central-planning peers have sown.

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knukles's picture

Give the man a curry Slurpee and a gold shirt

markmotive's picture

EM has been a big beneficiary of easy money. The system is as levered as it was in 2008.


Frozen IcQb's picture


What hypocrisy!

Moreover, Gold import should be deemed a Capital Account inflow which would increase the wealth of the country.


Oh regional Indian's picture

Raguram is a banksters bankster. Straight with IMF and MIT behind him. 

And of lots of B(i)S.

And inflation at 10%......lying statistics. It's more like 25% in things that matter, YOY.

BAsically, nice words, but the man is just another suit.


wee-weed up's picture

"just another suit"... or just another shit?  ;-)

(Your opinion is valued, Ori, since you're there on the ground in India.)

Oh regional Indian's picture

HEre, people like Raghu are treated like demi-gods walking on water. Quite sickening actually, knowing what it is these guys really do and who they answer to.

Incidentally, for those payign attention, even the RBI (India's central bank) was set-up in 1933.

After that, it was a matter of time before we had our faux independence from the brits.

1933 was a big bankster victory year.


prains's picture

bankster = oligarch in hindu, correct?

satoshi911's picture


Now the PTB have ran India into the ground, there is NOTHING left to steal, except the temple-gold.,

The PTB did the same thing in the USA, make the hair-lip think they were free post 1776 but in reality, they were never free.


Now is the time for a new reset, my guess is a new civil-war in both USA and INDIA, but when the smoke clears the PTB have new folks from all sides to rule, ... no matter how many war's the PTB always come out on top.

The only problem the PTB that have today is that there are too many people in INDIA and the USA.


Can the world ever be free? Only by taking the war to them, by taking the war to the PTB.

Can that be done? Has it ever been done? I think so long as men's hearts can be bought with 'paper money', the PTB will win.

disabledvet's picture

Smooooooke on the Water...
And Fire in Your Eyes!

"Frank Zappa and the Momma's" really are running this thing this time.
Just head on down to Bollywood and everything will be fine!

I've made it!
I've found my Octupussy!
Take that Vampire Squid!

Crash Overide's picture

I am pretty sure gold existed before paper, you can see where this is going. Again.

fijisailor's picture

Any ideas on the volume of gold being smuggled into India?  Nice to see you commenting again by the way.

Wen_Dat's picture

Willie had a some interviews the last few days. Ready to post again.

Wen_Dat's picture

Sorry, was insinuating that satoshi is jim willie. I like Jim he's entertaining. Go to the public section of golden jackass and there are a few new links for audio and article.

KickIce's picture

He was playing the paper money system to the very end and is now trying to come clean.

Otherwise known as a death bed repentence.


The ponzi only works as long as the politicians benefit from the system.

howenlink's picture

That's the best news I've heard all week.

BLOTTO's picture

January 30th (today) 1948: Mahatma Gandi assasinated.

Rukeysers Ghost's picture

Gandhi was a Communist and the only good Communist is a dead Communist.



CoonT's picture

Well, someone obviously forgot to post that memo; because both your country, and my province, are being run by one..

whatsinaname's picture

India will be one of the countries coming out in front with or without any help from its CB. The dust has barely settled folks.

The underground economy is so strong out there that they dont need no CB to tell them how business is done.

The Vineyard's picture

He should look on the brightside.  At least he's not working the counter at a 7-11.  Word.

whatsinaname's picture

Gold buying aint slowing down in India. Little slow in the urban areas but its actually going up in the rural (farming areas). Farmers are converting their newfound wealth thanks to the real estate boom into Gold. And even the Finance Minister admits that smuggling is going up.

Truther's picture

I can't believe how panic immediately appeared with these fuckers, while imposing capital controls on the populace. Let them go fuck themselves. I hate this shit and all these moron central idiots of choice.

satoshi911's picture

The panic in INDIA is 2 years old,

You have to wonder WHY NOW is the panic being sold to the US public via the MSM?

Why now?


Personally I think the USA has fallen down about as much as INDIA, and those jobs will probably now return to the USA, as many in the USA live in INDIA style poverty.

Always good to point 'over there' where its worse than where we are.

KickIce's picture

The panic may be 2 years old but this asshole has been playing the fiat game to the very end by discouraging gold sales.  Very western of him.

satoshi911's picture

What's he to do? His mandate is to protect the toilet paper currency, to do that you make the alternative look worse, trouble is people aren't stupid ( well they are in the USA ), so bad money is always replaced by good money.


I still say this story is BULLSHIT, otherwise why would it be on ZH?

Only see 2 reasons

1.) India  needs USA troops to secure the country from civil war.

2.) Goldman Sach's wants to steal the temple gold, for those who may not be aware, the 'temples' in INDIA hold the largest private stash of gold on earth, and I'm sure GOLDMAN-SACHS would kill every child in INDIA to get that GOLD.

India, is a failed British Colony, just like the USA is a failed British Prison Colony.

There is a new world order coming and the PTB in INDIA is desperate to hold UK Colonial power, trouble is they're fighting a majority, not unlike Saudi.

Most likely the political elite will use US-MIL power to steal the temple gold and then the ELITE will flee to some place like the USA where they might feel safe.

If I were a person in India, I would be HIDING the fucking TEMPLE-GOLD, cuz they are a coming.



prains's picture

....isn't there a pig that needs shaving somewhere in Bing Bong Pow Province, Satoshi ??

KickIce's picture

He's supposed to represent his people but instead he's acting just as is western counterparts.  And yes, if US citizens would do the same as the Chinese and Indian people this ballgame would already be over.

disabledvet's picture

"me me me me me me me me me me me me me meeeee me me.
me me me me me me me me me me me me meeeee me me."
"Beeker." (the King of all Muppets.)

tbd108's picture

I know India well, having lived there off and on since 1996, and in response to the Vampire Squid's lust for the temple gold, I strongly believe that the problems that resulted from the takeover of the Sikh's Golden Temple would be a picnic by comparison if they tried to loot the major temples. The devotees are aware of the would-be looting and are carefully watching.

satoshi911's picture

CIVIL WAR in India, its coming an this is why.

If ever there was a non-homogenous country of religious nuts held together by the best GLUE that anglo-saxon (PTB) FIAT can buy, its fucking INDIA.

Now that the most recent 'globalization highway robbery' has run its course its time to DIME-STORE unload all of INDIA's assets and quick, just like was done in the USA long ago.

Fuck yes the 'devotees' will fight, but remember the US-MIL and their INDIAN PUPPETS have drones.


I'm waiting for some IMF punk to come forward and offer to store all that TEMPLE-GOLD in a safe place in Israel.

Don't laugh, the Israelis have been running the show in secret in INDIA, for a long time. No coincidence that INDIA was freed at the same time that PALESTINE was "FREED".

akak's picture

So much effort and government attention on a mere "barbaric relic".

Like every other modern government, the Indian government's actions belie their true beliefs, and worries, surrounding the subject of gold.

FieldingMellish's picture

Hmmm... intl monetary cooperation breakdown, bank runs, sovereign debt crisis, currency crisis... good time to sell loads of gold into a very thin market all at once...

Richard Chesler's picture

...or to get on with Oceania once and for all.


CrashisOptimistic's picture

Cooperation began to breakdown when Japan starting buying ink by the barrel.  The Fed was not happy about the yen going to 120 or 130 and destroying GM and Ford.

The Euro is strong for one reason only, so they can pay GAZPROM for gas and Brent prices for oil.  When something is priced in dollars, you gotta get more of them for your printed money.

All these other EMs have to pay Brent prices too, so they are going to take a page from the EU's book and drive up their currency.  The fact that this destroys internal business simply has to take a back seat to getting oil bought. 

And that's the lesson of the future.  EVERYTHING has to take a backseat to getting the oil bought.

ReactionToClosedMinds's picture

atta boy ..... Euro has its own multiple skeletons in the closet ... and you touched on a few..

NOT reported in your jornolist news media ..... I know some savvy German biz folk who when they let their face down (some more than typcial wine or beer or spirits) admit they are very worried about macroeconomics and their (Germany) ability to withstand it all ... without serious wealth decapitation.  Many would sincerely authentically agree to do such for 'fraternitie' but they are also cynically wise to the politcal class fake-outs ..... your sacirifice and your neighbors while somehow not so much for us (political class) or our favorites in our coalition that 'supports' political class


ReactionToClosedMinds's picture

atta boy ..... Euro has its own multiple skeletons in the closet ... and you touched on a few..

NOT reported in your jornolist news media ..... I know some savvy German biz folk who when they let their face down (some more than typcial wine or beer or spirits) admit they are very worried about macroeconomics and their (Germany) ability to withstand it all ... without serious wealth decapitation.  Many would sincerely authentically agree to do such for 'fraternitie' but they are also cynically wise to the politcal class fake-outs ..... your sacirifice and your neighbors while somehow not so much for us (political class) or our favorites in our coalition that 'supports' political class


jerry_theking_lawler's picture

the oil is the companies are staffing up BIG time....and since no-one can build a new refinery, the refineries are staffing up very handsomely....hiring engineers by the droves to add incremental capacity and for process improvements.


the, i mean, the oil, is the key.

Pegasus Muse's picture

“Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.” –Groucho Marx

So, too, is Central Banking. 

fonzannoon's picture

India's Central Bank Governer is best exemplified by Will Ferrell here at this meeting with Ben Bernanke (Mike Myers)

DeusHedge's picture

Owe it to the US to weaken perhaps the last army that would fight for us other than our own. Our international reputation must truly precede us.

satoshi911's picture

India has been a secret whore to Israel for years, along with Pakistan, the shit has pissed off the populace.

Civil war is coming and the legacy of UK/Israel/USA control is fucking thin, ... very fucking thin.

If the west trys to steal the fucking TEMPLE-GOLD, you could see a lot of people in INDIA sypathazing with Muslim's.


Some things in life are sacred,but Goldman Sachs' wouldn't know that, ... interesting times to see how far unbridled power can take you.

WillyGroper's picture

They hate us for our "FreeDumbs".

NoDebt's picture

"for once a central banker admits that his peers are on the verge of losing control of the globe - of course not in those words as the result would be sheer panic upon the realization that central bankers are just as clueless as everyone else -"

I wouldn't go that far.  They're not losing control just yet.  They've merely decided to start picking winners and losers, being obviously unable to save everyone.

India has been voted off the island.

satoshi911's picture

That is clear, SA, INDIA, ... Austraila have all gotten bitch slapped.

But to blame the FED? SHIT the $85B is to buy US-PAPER so the USA gubmint can pay its bills, and so far 'taper' is bullshit talk, and INDIA has been going to SHIT for over a year.

The real problem is that the high-tech BOOM in INDIA is KAPUT. Nobody wants to live there, and its game-over.


India is not unlike IRELAND a few years ago, ... BOOM years and then KAPUT.

INDIA would be smart to do an ICELAND to the IMF, but I think not, given a UK COLONY they will fuck their citizens in the ASS, just like the USA.


Even if INDIA did an ICELAND "TELL THE IMF TO GO FUCK ITSELF", its still would not fix a dirty caste society, that is still in the dark ages of poverty and swimming in human shit.

INDIA is much like AFRCIA (KENYA), had its good time and now it reverts to former itself.

NoDebt's picture

Even if I agreed with all that (which I don't, although you have some good observations), you just..... use too many damned words to get your point across.  You're all over the freaking map, literally and figuratively.  My brain hurts when I read your posts.  Do you have A.D.D.?

You are explaining shit to people who don't need the long-hand version.  You can short-cut it and we'll still get it.  Swear to God, we're not all stupid.  Treat us as such and it's offensive.

Remember, when you're explaining, you're losing.


satoshi911's picture

Pot Calling the kettle stoned? xxxoooxxx


How about taking a deep breath, and talking issues? Rather than generality's?


I write the way I write, you write the way you write. Get over it.


Let's see ZH, 80% trolls (ZH bots, BTC bots, GS bots ), 18% morons (IQ<100) , and 2% interesting people ( have traveled ). Trouble is the 2% don't know how to turn off the /sarc, /snide, and /stupid most of the time.


Scarlett's picture

As far as I know, you are the biggest moron of the house.  Congrats!