Protests Slam India's Economy As "The Concept Of Money Dies"

Tyler Durden's picture

Submitted by Jayant Bhandari via,

A Market Gripped by Fear

The Indian Prime Minister announced on 8th November 2016 that Rs 500 and Rs 1,000 banknotes would no longer be legal tender. Linked are Part-I, Part-II and Part-III updates on the rapidly encroaching police state.

The economic and social mess that Modi has created is unprecedented. It will go down in history as an epitome of naivety and arrogance due to Modi’s self-centered desire to increase tax-collection at any cost.



Indian jewelry merchant


Fear has gripped the bullion market, for one is deemed to be guilty until proven otherwise. People with perfectly legal cash are afraid of cameras recording their purchases and having to pay outrageous bribes. After an adjustment period people will buy more — not less — gold. For now, the gold market has gone mostly underground with the gold price hovering around US$1,700 per ounce. Did Modi want to boost the informal economy?


The Cultural and Political Undercurrent

The individual has been reduced to a cog in a big machine that exists in Modi’s imagination. The country is expected to rally behind him, for his glory.  The IMF is going along with Modi, for in their simplistic view, enforcing western-style institutions on India will lead to the replication of western economic development and the rule of law in India.

Not that increasingly totalitarian and centralized governing institutions work even in the West, but in the alien culture— irrational and tribal — of India, they rapidly mutate and become very corrupt. That is, unless such institutions are run by Europeans. But the days when Britain ruled India are over.

In the irrational and extremely tribal society of India, where calculation and planning are much more difficult, institutions must be much more decentralized than in the West if they are to function properly. At the moment Modi is doing the exact opposite: rapidly increasing his centralized control.

Modi and the other fake-elites are not the only people responsible for the mess.  The real poison comes from society itself. India’s salaried middle class has been given western education. But the concept of critical thinking and reasoning never really got any traction in India’s society. The situation has steadily worsened since the British left 69 years ago.

Similar to other Indian institutions, the education system has continued to deteriorate. Members of the middle class, while retaining their superstitions, did learn the superficial mechanics, but devoid of any deeper meaning. In their simplistic, mechanical thinking (for complex thinking never evolves until one has critical thinking), they came to believe that superficially copying western institutions should be the way forward for India.

Moreover, the salaried middle class that supports to Modi, is currently unaffected by the currency ban and hence can claim the moral high ground. It is the hungry, wretched and starving people, the small businesses, the real backbone of the economy, that are worst affected.

Politicians within Modi’s party and in the opposition have struggled to oppose Modi effectively, for they are all corrupt. Given the irrationality of Indian society, people tend to communicate in slogans and sound-bites, not through argumentation.  The slogan they have been given by Modi is: If you oppose demonetization, you are hiding unaccounted for, corrupt money.

What most in the self-centered salaried middle class forgot to consider is that their paper-shuffling jobs will soon be at enormous risk, as the cascading effect of the harm done to small businesses will eventually destroy their own jobs. Within three weeks, people are getting laid off across the country. The middle class will also suffer from the inevitable increase in crime that the hunger and desperation of poor people is likely to bring about.



Factories are closing. Millions of the most vulnerable are rapidly losing jobs. Hunger, poverty and famine are on its way. Is this Modi’s version of Mao’s cultural revolution?


Indian institutions had to mutate to cater to the underlying culture. Institutions of India as left by the British are now rapidly degrading, with Modi acting as the catalyst. India will become more totalitarian as the last vestiges of democracy and the associated liberties are destroyed.

It is hard to believe that India can continue to exist as a single unit for long. The problem is that nothing in India is structured to allow for a peaceful breakup. Secession is not recognized in the constitution or in the law, ensuring that any breakup will be accompanied by massive violence and pain, perhaps worse than what happened in 1945, when India and Pakistan split up.



Laid off from jobs, people now visit religious institutions — here a Sikh institution — for free food

Photo via


Money Monopoly

It would have been almost impossible for me to believe that a single person would be able to bring a large, complex, and extremely diverse society like India to a sudden standstill.

One could change the government, change some important laws, or even impose dictatorship, but it is almost impossible to quickly and significantly change the direction of the Titanic.

Despite my pessimism about India, I had not considered that there could have been a single key issue that would fundamentally change society, stall the economy, and throw society into utter confusion, desperation and depression –  but Modi found a way.

Banning 88% of the monetary value of the currency in circulation, which catered to 97% of consumer transactions, meant that the economy went into a traumatic shock, throwing financial commitments and contracts out of gear.  Now a vicious cycle is underway.

Fiat currency is fully under the government’s control. This paper-based currency system is extremely corrupt, as it has no inherent value of its own. All its perceived value is derived from regulatory edicts and citizens have to look to the government for directions. Control over the printing press gives the government autocratic control over inflation, deflation, and credit.

I realize now that monopolistic control over the currency is an even worse problem than I thought. As a result of Modi’s decrees, the concept of money has died for a large section of society.


Social Engineering

A simple instruction led to a ban on 88% of the monetary value of the currency. Even if this had been well-planned, the decision was so drastic that it would have required massive and continuous tinkering. It was horribly planned though,  requiring a series of patch-up jobs.

The government has continued to release new instructions on how much banks could convert, to whom and on what basis, what would be taxed, and what would be deemed to be illegal cash. No one really knows what the latest rules are and even the banks are confused. One wonders if Modi himself still knows what he wants.

The government had no way to replace the old banknotes by new ones. Merely printing the notes would have required at least six months. Distributing these to villages, which can be tens of kilometers from the nearest bank, would have taken a lot longer.

In the meantime whatever good money is still available — the 12% of the still-legal tender — is rapidly going out of circulation, disappearing below the mattresses of the relatively rich. ATMs and banks are constantly running out of cash to dispense.

With every passing day, the queues have grown longer and longer. Old people, the disabled and women (unless they were prepared to endure sexual harassment) had no way to convert their currency. They were hoping for the queues to shorten and become more orderly. This is no longer going to happen.

By November 24, the government realized that even this chaotic conversion could not be sustained. It gave notice that the conversion of old banknotes was to be  abruptly discontinued.

With the end of conversion those who have no bank accounts — 50% of the India’s population — are now left in a situation in which their banned currency has indeed become toilet-paper.

In a country in which the vast majority of people survive on a dollar or two or often much less per day, whatever they had has been stolen by the government, taxed away indirectly. Could there be a worse tax than this?

Theoretically, they can still walk into a branch of the Reserve Bank of India, which  only has a handful of branch offices around the country, in order to convert Rs 500 bills. Rs 1,000 bills will no longer be converted at all.

Modi now expects these poor people to travel hundreds of kilometers and spend a fortune to change Rs 2,000 or so ($30) at the most. Apparently, Modi cannot even do primary school math.

Those who think Modi is in favor of the free-market should pay attention to what the concept actually means to him and his followers. To them, the free-market means the ability of the government to confiscate the property of poor people — for example, their land for infrastructure — for the so-called “greater good”, to be handed over to corporations or the State.



Tourists trapped in “Incredible India”, left to perform on the streets or beg, for a return ticket to Delhi

Photo via


This is the irony of India. The communist revolutions of China and Russia were at least partly about getting rid of the entrenched middle class, a.k.a the “bourgeoisie”. The Modi-led revolution in India is about the salaried middle class trying to get rid of poor people — India’s deeply entrenched caste system does not allow for poor people to be seen as human beings.

There will eventually be blowback from the poor people and it will not be pleasant for the members of the salaried middle class. But irrational as they are, they cannot yet foresee what is likely to come next.

The government has also given notice that it will tax all the cash deposited that it thinks is somehow suspicious at a minimum rate of 50% and will require the remaining 50% to be frozen for four years.

Interest rates are now falling, helping out debtors and the well-connected, to the detriment of savers, while destroying the future economy by interfering with the efficient allocation of capital.


Demonetization has not Achieved any of the Claimed Benefits

Modi claimed that this demonetization would flush out fake currency bills. Not many have turned up, certainly not in any unusual quantities. Perhaps Pakistan is now vindicated, as it had been accused of printing most of the fakes.

Despite the fact that the new bills have been in circulation for less than three weeks, fakes of the new banknotes have already begun are circuatingto such an extent that many people are refusing to accept the new bills.  The new bills — even when they are not fake — are badly printed with many errors.



These are not fakes, but defective new banknotes

Photo via


The new bills of Rs 2,000, with a face-value twice as large as the largest of the old banknotes, are proving very efficient for giving and taking bribes.

Finally, with a large part of the country’s cash now removed from circulation and having moved into the banking system, the cash reserve ratio has been increased, as excess liquidity in the banking system has flooded into the bond market. This has driven bond yields lower against the RBI’s wishes, which is moreover in danger of running short of collateral for its repo operations.

As a next step, the government will issue “market stabilization bonds” to soak up excess liquidity in the banking system. Thus private capital has been crowded out, moving into the hands of Modi’s government.



Protests have started in isolated pockets. I am tempted to side with them, but I am fully aware that any counter-revolution or organized protest virtually always involves a heavy-handed approach. The opposition will be no different from Modi’s brigade, and the next sociopath to come after Modi will probably be even worse than he is.

Photo credit: PTI


Protest against demonetization


Conclusion, for Those Living in India

Once social engineering of this size has started, people will and should take steps to protect themselves and their families. Decisions should be made today, not tomorrow.

People’s money in banks is frozen and can no longer be used for purposes involving cash. Every indication is that this money will stay frozen, as Modi wants coerce people into invest their money according to his preferences: into low-interest bonds or negative-yielding infrastructure projects.

Any rational person should be to trying to avoid getting stuck in what is a rapidly emerging police state that will control people’s finances and eventually their entire lives.  It will probably be best to take as much investment-related money as one can out of the system, or even better out of India.

A few escape routes still exist for the time being. By law it is still possible to move out US$250,000 per year outside India. This window cannot stay open too long. Until it is shut, one still has the option to move money into foreign currency or investments in more productive instruments outside of India.  One should also be able to store gold with an offshore entity in a country that respects private property.

Many rich Indians already do the above, all legally. They own swaths of properties in HK, Singapore, and Thailand, and increasingly also in Canada and New Jersey (USA). Many directors of Indian public companies are officially resident in Singapore, to avoid becoming a puppet of the extra-ordinarily corrupt and rapacious Indian government, which has been made much worse by Modi.

With India’s institutions now rapidly degrading and the salaried middle class having been zombified, risks are extremely high. Explore your options before the encroaching police state closes the remaining avenues of escape.

Of course, being totally incompetent, India’s government cannot enforce a full-blown police state, but that will not stop massive damage to the economy and what will bring about chronic and frequently acute anxiety among Indians.

India will fundamentally change going forward, in a very negative way. It may eventually disintegrate, a possibility for which one should be prepared.


As the month of November 2016 comes to a close, members of the lower classes who must convert their soon-to-be-paid salaries to cash will face even greater desperation.

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Ghost of PartysOver's picture

Who is more adept at killing a country, Chavez/Maduro or this clown.

Haus-Targaryen's picture

Interesting to notice how that works. 

Poverty leads people to faith.  Perhaps the invese is more accurate, those with more money than their needs require tend to stray from faith. 

Not trying to be religious here, but just an observation. 

BaBaBouy's picture

They Will Soon Realize To Drain The Mody Swamp Is Enlightenment ...

NoDebt's picture

This is definitely worth the HUGE reduction in crime rates they're now enjoying.

Remember, that's how this was sold.  Reducing crime.  Just so you know the bullshit song and dance they're going to be telling us when this clusterfuck comes to the US.

Luc X. Ifer's picture

No, what happens in EU, US & India proves only one thing - gigantic human social enclaves are doomed to collapse under their own weight.

Leopold B. Scotch's picture

Correction: The last vestiges of liberty will be destroyed and demcracy  will succumb further to further manipulation by the elites and/or tribal authoritarianism, if it surviives at all.

fukidontknow's picture

Progressive propaganda site the Accredited Times say it's all good

What world are they from?

Jim Sampson's picture
"The Concept Of Money Dies"


MMMMMM!  Say it again!


"The Concept Of Money Dies"


OH YEAH!!!  One more time!


"The Concept Of Money Dies"


YES!!!   YES!!!  OMG YES!!!

manofthenorth's picture

"enforcing western-style institutions on India will lead to the replication of western economic development and the rule of law in India"

Sorry folks, it was all a bad joke.

There is no "rule of law" in the west.

Western civilization is dying because of it.


It's what's for dinner.

"I realize now that monopolistic control over the currency is an even worse problem than I thought."

Absolute power over EVERY transaction and EVERY unit of labor saved might be a terribly bad idea ? REALLY !!!

Who would have thought ???


Lore's picture

Exactly!  Comments from several newly-joined ZHers suggest great naivete. Let's not mince words.  The author is quite accurate in describing the leadership as clinically psychopathic. There's only one way to protect against a predator who threatens you and yours.  EVERYONE READING THIS HAS BEEN WARNED. 

Creative_Destruct's picture

Neo-feudalism and increasing central control of a complex-dynamic system which decreases its adaptability and lowers its long term stability and ability to adjust to shocks. Not just India but the whole world is being set up for catastrophe by these foolish approaches. Modi, and the rest of the central planning crowd and the globalists all need to put N.N. Taleb on their reading lists.

Withdrawn Sanction's picture

I'll give you the benefit of the doubt and assume you're either uninformed or misinformed.  But to call for the death of the CONCEPT of money as such is a call for a return to the stone age.  It is the hallmark of a savage.  An advanced division of labor economy as in India or the US absolutely requires money; there's no way around it.  Otherwise, we waste time orchestrating goods-for-goods trades rather specializing in what we do well.  

It is true that FIAT money is not required, and if you're celebrating the death of fiat money, then Im with you.  But fiat is not the only form of money, and people (even the Indian lower classes) are perfectly capable themselves of finding a suitable form of money.  And I suspect they will....since necessity is the mother of invention. 

lasvegaspersona's picture

click that link....if you wish to support the insanity of MDB

MillionDollarBonus_'s picture

These are paid protestors! The majority of Indian people want a cashless system! This is a FACT!!

Luc X. Ifer's picture

Obviously u don't know what a fact is as you missrepresent bombastic demagogy as a fact. restart from grade 4 for gawd sake 

TalkToLind's picture

Paid with what? All Rupee bills of any real value are now illegal! Maybe they are paying them in salt.

Getafix's picture

Old bills being sold at a discount. New bills at a premium.

The poor work all day to be paid in old notes, because businesses dont have new notes to give.

And then they sell them to the friendly neighborhood moneychanger who is an agent of officers from the local bank branches, who siphon off all the new notes to create the shortage in the first place.

So, the poor end up taking a 30-40% hit just to be able to eat at night and pay rent to the landlord.

Interesting you mention salt, because looks like thats soon going to be a reality.

SilverRhino's picture

Modi has given EVERYONE a truly solid lesson in the differences between fiat currency and real money.   

Creative_Destruct's picture

Everyone, please ignore this click-baiting shill.

Withdrawn Sanction's picture

If they have to call themselves the "Acredited Times" you know they're dishonest as the day is long.  If someone tells you, first thing out of the chute, that they're honest, what's your first reaction?   It's like a "Smart Car" or a smartphone....are they really "smart?"  

I suppose the upside, MDB, is you didn't cite Snopes to support your argument from authority

Mountainview's picture

The original idea of money has to be brought back. Money is a generally accepted representant of value. In Iceland is was once "Mercedes cars", in Italy they gave you back chewing gums as change and in India it is still gold. The criteria: It has to be accepted by the two partners of a trade. The state is not a necessary component of the deal.

Luc X. Ifer's picture

Agree the only regulatory entity for the goods we call money has to be the market itself as money as goods are nothing else but an intermediary exchange channel for the other goods

PTR's picture

"...It has to be accepted by the two partners of a trade. "


Sounds like #Pizzagate stuff.



And now back to India batshit-ism.

BaBaBouy's picture

If You Fuckup, Just Double Down...

Leopold B. Scotch's picture

The price of going full retard will be even worse.  And you know those in power can't resist!

Nobodys Home's picture

They are already singing this song in the US. Only criminals need 50s and 100s. I'm not a criminal (yet) and I use them all the time. 100s are what? 80 something percent of the currency floating around in the world?
Yah. Let's ban 100s and 50s too while we're at it.
Just like India's ban of 1000 and 500 rupee notes. See how that worked Mortimer? Perfectly!

Dugald's picture


Modi, next inline for a Nobel Prize.....

I have found that Indians are so arrogant they could almost be French....

Azannoth's picture

Humans always double down on bad decisions till the Laws of Nature reassert them selves again. This time will be no different.

TruthHunter's picture

Additionally, rural people have converted to Christianity in huge numbers. Modi's pro-Hindu support couldn't care less what happens to them.

Oh regional Indian's picture

That is a very good observation.... christian conversion in rural india is happening at an alarming rate.

As for this demonitization fukkery, god help India...shoved into a standstill from what was a fairly active economy.

This has City of London joo banksters written all over it....

d2thdr's picture

THe author has an axe to grind. All his reports are unreal because on the ground the situation is good. Its not hunky dory but much better than what this man claims. Zerohedge come one chaps, do some due dilligence. Dont promote crackpots.

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) Ghost of PartysOver Dec 1, 2016 11:44 AM

"CONcept" of money.. yes, isn't that what we are really doing? Psychological warfare and not "investing"?

mary mary's picture

Ultra-conservative Modi and ultra-liberal Maduro arrive at the same place.

lasvegaspersona's picture

the only lable that counts is 'statist'...centralization is the problem....I know that is simplistic but it is a good place to start your thinking.

bka's picture

He is not a clown.  He is a NUT.  Its very difficult to deal with a nut.  All his ministers are clowns. Only clowns can get along with a NUT

adanata's picture



These ongoing experiments are instructive; convert those bills while you can.

Nexus789's picture

If you did a little research you would find that the IMF, Clinton and Obozo were screwing over Venezuela. In terms of killing countries for no reason the US is the world leader of that sort of stuff. 

The Indians are unique as they alone appear to be stuffing up their country.  

highly debtful's picture

Modi really deserves a Nobel prize for the most stupid, fucked up economic idea ever. And there has been plenty of competition in that field of late.  

Sisyphus's picture

Would you believe, supposedly, some 80% of the people polled support this initiative? Tyranny of the gullible.

Some interesting on-the-ground observations here:

Getafix's picture

Actually the number is more than 90%.

Minor technicality, the poll was done on a phone app run by the political party to which Modi belongs, and is mostly downloaded by his political followers and fans.

Funny how easy it is to make it look like you are going to win an opinion "poll" when most people on the street have no opinion of there own anymore.


LawsofPhysics's picture

"Full FAITH and credit"

that is all...

DC Beastie Boy's picture

Before the you-know-who-clown comments, I'll say that the underground economy is growing every day, it's the most benefit to the individual consumer with avoiding transaction fees, government oversight while maintaining individual privacy. 

The less governments know around the world know what the people are doing, the better.  Throughout history, larger government has always led to more oppression and killling innocent victims of their country.  Always and in every case this has happened throught the history of the world.

LawsofPhysics's picture

Bingo.  If the women holding that hulu hoop really wants to make some "money", my guess is that there is more than one local Indian warlord who can give her a job.

free markets bitchez...

the more the government squeezes, the more prevailent they will become.

youngman's picture

Those are not TOURISTS...they are Hippies and they are in every city I have ever visited...they hang out in drugs..and Busker like this for money...Whoever wrote this is a great fiction writer...he must have a lot of illegal cash

DC Beastie Boy's picture

It says, 'you must have Adblocker on"

So, I checked and yes I have it on.




bonin006's picture

Yes, when assholes give me that message I just go somewhere else.