India Uses Helicopters, Air Force Planes To Deliver Freshly Printed Cash

Tyler Durden's picture

As India continues to struggle with a countrywide cash shortage as a result of the November 8 demonetization in which the government unexpectedly removed the highest denomination bills out of circulation and which has brought various mostly rural part of the cash-driven economy to a halt, the government is resorting to ever more novel solutions how to restock outlets with new, "clean" cash.

As the Times of India reports, authorities have managed to cut down the transportation time of cash from printing to the main distribution centers from 21 days to six and by using all modes of transport, including helicopters and Indian Air Force planes, to move the cash quickly. The government is hopeful that the situation will improve over the next week. With availability of cash improving in urban areas, the government is concentrating on rural areas.

While even tenured economists have predicted that the short-term may lead to a shock for the Indian economy, senior government sources are hopeful that the level of economic activity should climb back to normal levels by January 15. Referring to any "windfall" from the decision to demonetise 500- and 1,000-rupee notes, sources said any gains could be used for recapitalisation of banks, building infrastructure and purchasing advanced weapons systems for the armed forces.

"RBI may transfer higher dividend or there could be a special dividend," the sources said. There is a probability of the government getting a "windfall" as a significant portion of the notes may not come back. This will reduce the liability of RBI and increase its ability to pay higher dividend. "Even in 1978 when the government resorted to demonetisation, 20% of the notes did not come back," the sources said.

They said they would not like to speculate about the number of notes that may not come back into the system.

Meanwhile, logistical challenges have emerged. The Indian newspaper writes that according to sources, Rs 2,000 notes could not be put in the tray meant for Rs 1,000 notes as the recalibration required both hardware and software changes.

Finally, while there has been much speculation just why India engaged in this shock "purging" of the shadow economy, here is the explanation from Ravi Bansal, JB Fuqua Professor of Finance and Economics at Duke University

As you know, India demonetised. Several billion dollars worth of rupees will essentially vanish from the shadow (black) economy, due to the very tight window to convert the black money to some other valued asset. Let’s assume $50 billion worth of rupees are destroyed because they cannot be converted to alternative assets like gold or some other hard currency; this essentially is wealth tax on the holders of black money. What is remarkable, and less understood, is that it also writes-down (lowers) the debt of the government by the amount of notes destroyed by the demonetisation. If roughly 25 percent of the notes are not converted then the debt write-off is about $50 billion. That is about 2.5 percent of the Indian GDP!

In other words, the Indian "demonetization" was merely a quick and easy way to eliminate some tens of billions of sovereign debt, while at the same time "cleansing" the economy of cash whose source can not be documented. It is likely that should India's experiment prove to be successful, it will be followed in many more cash-rich nations.

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greenskeeper carl's picture

Literal helicopter money. I thought the bernank was joking about that....

I also thought we'd see helicopter money in Japan first. Way to go India, showing the world's central bankers how a true economic basket case takes care of business.

ParkAveFlasher's picture

In my mind India's #1 export is cheap English-speaking labor.  Looks like they are trying to flood our markets, yet again.

JohninMK's picture

Wonder how many really pissed off voters that 50-80 billion represents.

ParkAveFlasher's picture

No worries, they don't have a 2nd amendment.

JohninMK's picture

The UK starts replacing the £10 note next Spring but a more interesting opportunity may be the £20 note that follows later.

Jim Sampson's picture

 

India is fucked!

It's all good, Krugman said so!

JuliaS's picture

Shoot money sacks through windows. Krugman will be pleased.

Sam.Spade's picture

Shoot money sacks through Krugman.  Every one else will be pleased.

Or, shoot Krugman through a window.  If it's high enough, every one else will be just as pleased.

JuliaS's picture

Krugman going through a window? How strangely appropriate!

https://www.youtube.com/watch?v=-Y2wqkD2KVM

zeronetwork's picture

India is a strange country. Once you go their, you never want to go there again.

stacking12321's picture

yes, shooting sacks of money through the windows is exactly how it's done, here's clark and dawe to tell us about it (2 min):

Clarke and Dawe - Quantitative Easing

https://www.youtube.com/watch?v=j2AvU2cfXRk

chennaiguy's picture

Not many.. People here don't understand economics here....they are all praising modi for this... Supposedly this is a surgical strike against black money... Lol.... I had to stand in line for 3 hours in 2 ATM's to get 2000 rs.. And all I hear is "modiji is a great leader" ... This is crap

DownWithYogaPants's picture

Your media like ours is totally owned by the Private Central Bankers.  Thus they say what they are told to say and that is "Modi is a good leader".

 

I seriously doubt most people think that.

Sam.Spade's picture

Hello, People Of India:

Please read Thieves Emporium.  It's a primer on how the rich control your lives.  In particular, one of the threads that run through it concerns money and how it is used, exactly as in this case, to enslave you.

Hundreds of copies of the book have already been sold into your country.  I wish it were thousands.

If you can"t afford to buy it, contact me (I'm the publisher) at ZH8504552@seabird.us and I'll see about getting you a no-charge evaluation copy.

But, please for all our sakes, read this book and tell others about it. Because your struggle is our struggle.

Your freedom and the freedom of your children is at stake.  For generations to come.

To buy a copy, go to https://www.amazon.in/Thieves-Emporium-Max-Hernandez-ebook/dp/B00CWWWRK0

To read some of the 110 reviews (4.6 rating) on the book, go to https://www.amazon.com/Thieves-Emporium-Max-Hernandez-ebook/dp/B00CWWWRK0

maxblockm's picture

Hello, People Of ZH:

Please read Thieves Emporium:

http://www.thedailybell.com/editorials/max-hernandez-introducing-thieves...

 

It's good.  I've made it to part 13.

If you like it please support the creator and supply chain through your favorite medium of exchange. 

 

 

Reginald Blome's picture

Max - 

I read your book a couple months back. It was a great read. Thank you.

JohnGaltUk's picture

When governments do stupid things like this they destroy their own economy.

In the Ukraine most folks use local currency to buy everyday stuff like milk, bread and coffee but if you buy or sell a car or house they use USD or Euro.

c2nnib2l's picture

in some point yeaaah... 80% of UK call centers are India based They took our jobbsssss ! they don't have to travel to UK ^^ 

MEFOBILLS's picture

Helicopter money per Bernanke is injected directly into the real economy.  

This is different, it is removing large denominations and swapping for smaller denominations.  

It is not an injection.  

It is a culling of old large denominations during the swap.  The swap is pysical tangible money for physical tangible money.  The hope it appears is that many will not trade/swap their large denominations, and hence the large denominations will be demonitized.   No injection of new money.

The hellicopters have nothing to do with anything, other than speedy transportation.  

They could have just as easily changed the bills color, or type, and said old are no longer legal after x time.  This is how it was done in the past, especially when coins were demonitized.

There might be something else sneaky going on.... 

Pgg1507's picture

PAPER IS NOT "MONEY" IT'S CURRENCY

Sam.Spade's picture

You can pick whatever definition you want for the term 'money'.  But if you use one that no one else uses, you will just be standing out in a field all alone.

More to the point, if you pick one for political rather than logical reasons, you will only guarantee that you won't be able to come to any meaningful conclusion about the economy because definitions are the foundation on which we build our analytical house.

Allow me to suggest a more useful definition:  Money is the 'blood' that circulates through our commercial system.  That definition not only allows an analysis of inflation, deflation, and political control as it relates to our present situation, but it jibes with the definition commonly used throughout the world.  Don't believe me?  Then call up someone in Zimbabwe where inflation is running rampant and ask him.  He will not be sure what you are asking because the question is so simple.  When he finally realizes that you are serious, he will say "It's what I buy stuff with, mon.  Don't you know, what, you stupid or something?"

The subject of money (as defined analytically, rather than dogmatically) is examined in the novel Thieves Emporium. That book is a primer on how TPTB control us.  Fast paced, technically accurate, very scary, and written using a fiction format to keep you interested in the points being made.

The Daily Anarchist loved it and called it 'Barely Fiction'.  The editors of The Daily Bell thought it was so good they ran it as a serial.  And one of the Directory of the Bitcoin Foundation said of it:  "I recommend you read this book".

But don't just take their word for it.  Readers at Amazon have given it over 100 ratings with an average of 4.6.  Ditto for the readers at Barnes & Noble and Smashwords, though without quite so many reviews.

Needless to say, The Deep State probably doesn't like it, so you better get your hands on a copy before they force it off the market.

https://www.amazon.com/Thieves-Emporium-Max-Hernandez-ebook/dp/B00CWWWRK0

http://www.barnesandnoble.com/w/thieves-emporium-max-hernandez/1116498383

https://www.smashwords.com/books/view/346807

 

MEFOBILLS's picture

PAPER IS NOT "MONEY" IT'S CURRENCY

 

Money made current has flow.  It is moving within the system.  Intangible ledger money has flow, therefore it is current.

To make money "current" is to put it in motion - to have velocity.

In the old days when the money supply had a large fraction of tangible currencey i.e. Paper, then one could argue your point.  Paper was used for transactions.

Money is general demand.  General demand can be of different forms - tangible or intangible.

Specific money types are not GENERAL, their demand is limited.  For example, the U.S. dollars is used worldwide, therefore it is more general demand than say, a Ruble.  The Ruble would be money used only in Russia and hence is more specific.  A specific type of money was issued in Vietnam by the U.S. forces, only good for being spent at U.S. military bases...

 

 

floomby's picture

Yep, "Literally helicopter money" was my first thought as well. jajaja

Sam.Spade's picture

"Literally helicopter money". 

Not in the sense that Bernie was talking about.  To satisfy his definition, money must be:

1.  Distributed at random

2.  Distributed anonymously

3.  Distributed without any reciprocal obligation

The money being delivered in India doesn't satisfy any of these criteria.

Nor is it, or any liquidity-inducing effort likely to because it will result in a shift in equity, and hence ownership, in our society from the uber-rich to the rest of the population.  Since ownership of societal assets is power, and they are all about maximizing what they have, they will never allow 'helicopter money' to occur.

Amaroosta's picture

I told Modi to try "Helidopter Money" and he actually did it, the absolute madman!

New_Meat's picture

That, dear sir, is "Velocity of Money"

The central planners's picture

Dont worry Pakistan if India begins to launch the new bhramos missiles system its just currency tactical defence.

SHEEPFUKKER's picture

Somewhere in an ivory tower far far away, Ben Bernanke is smiling.

LawsofPhysics's picture

Yes, because the fiat being delivered isn't FRNs.

medium giraffe's picture

You wanting more helicopter moneyings? Thankyou please!

Moe Hamhead's picture

Now that's "helicopter money"!!

I know, I just had to say it.

LawsofPhysics's picture

TO WHOM?!?!?

It's always important to ask the right questions sheeple.  If you want to increase the demand for something, get the government to ban it.

In this case, there is now extraordinary demand for physical cash.

Elco the Constitutionalist's picture
Elco the Constitutionalist (not verified) LawsofPhysics Nov 21, 2016 4:12 PM

Coupled with a dip in PM prices, it is enough to make you say hmmmm.

walküre's picture

Helicopters filled with cash all over India's hinterland and none of them ever go missing... right?

And trains don't derail in India either because their infrastructure is so fucking superior to the world.

India is a shit hole. Their politics are shit and their people still treat each other like shit.. but they drink tea!

financial apocalyptic contagion's picture

asia is a shithole. 60% of the world's population trapped and fucked over. luckily some of us could escape.

chennaiguy's picture

I am from india... The reson why the demonetization took place was to save insolvent banks.. Especially SBI the largest bank whose NPA is around 7%. ...   http://m.economictimes.com/markets/stocks/news/sbi-reports-31-7-drop-in-...

 

We are spending the weekends in ATM lines just to mange the weekdays.. And do you know what I hear . all hail great leader modi for his brave step.. I am like "WTF? Its a bailout for SBI and their minions "... But of course I don't say that to them.. Or they will become angry and tell me to go to Pakistan !!!!!

walküre's picture

same old same old corruption then? I thought Modi was from the little people and a radical Hindu to boot?

bluskyes's picture

Someone needs to tell the Banks that you can't bail them out with existing money. It has to be newly created, and with negative interest rates atached.

It doesn't matter. Recognition of insolvency, and default is the only path to solvency.

Usura's picture

I am under the impression that Indians are smart enough not to place their confidence in government issued fiat currency.  And that is the rationale for Indian's large personal holdings of gold.  How much more convincing does the RBI need to provide?

TalkToLind's picture

 "WTF? Its a bailout for SBI and their minions "... But of course I don't say that to them.. Or they will become angry and tell me to go to Pakistan !!!!!

In Murica you'd be called an anti-semite for thinking such things!

Sam.Spade's picture

Suggest they read a copy of Thieves Emporium instead.  It says the same thing, with considerable backing.  And, since it's a fun read, they probably won't tell you to go to Pakistan for suggesting it.

See my earlier comments to you.

And thanks for posting.

c2nnib2l's picture

Tell me something. I was thinking of Traveling to INDIA with my phisical gold. Not sure how I'm going to do it yet as you've got gold limits on import. But I was thinking about illegal gold smugling ^^ which border would be the easiest to cross ? I'm guessing Pakistan is out of question at least for now ^^ 

 

 

sekhars's picture

how does this helps SBI ? 

NoDebt's picture

This is not cleansing the black market.  If that's all they wanted to do they could have changed something as simple as the color of the bills and mandated theychange to the new bills.

No, this was eliminating "high denomination" currency.  Their highest denomination bill now is the equivalent of $1.50 (100 Rupee).  About 80% of the currency in circulation was eliminated by elminimating the 500 and 1000 Rupee notes.  80 freaking percent.

This is a clear push to an all-digital currency and has little to do with the "black market".

 

RadioFlyer's picture
RadioFlyer (not verified) NoDebt Nov 21, 2016 2:59 PM

You are wrong.  The helicopters are dropping bales of 2000 rupee notes.  About $30.

 

1000 and 500 were dissolved. ($15, $7.50)

Jack's Raging Bile Duct's picture

As I see it, just one more step to remonetizing gold for daily use, rather than major undertakings or emergencies. So many unintended consequences can come from this act of desperation.

SloMoe's picture

Holy shit. I hope at one of the helicopters is named, "The Spirt of Bernanke"

King Tut's picture
King Tut (not verified) SloMoe Nov 21, 2016 3:24 PM

Like the WKRP In Cincinnati episode "Turkeys Away"