Is India’s Cash Ban A Test Case For The West?

Secular Investor's picture

india-cash-ban-2

Source: BBC.com

In November of last year, the board of India ’s central bank has approved the removal of high denomination bank notes. Surprisingly, the central bank didn’t announce the vote count so this decision really seems to have been made in a rush to serve prime minister Modri, as he announced the ban immediately after the vote. This means we have absolutely no idea whether the vote ended on 6-4 or 10-0, and why there were any dissenting opinions (if any).

india-cash-ban-1

Source: BBC.com

The decision to abolish the high denomination bank notes shouldn’t be taken lightly, as they represent almost 90% (!) of all bank notes in circulation and on top of that, India is predominantly a cash-nation. Most businesses and consumers prefer to seal their transactions with cash rather than plastic and digital money, and now hundreds of millions of Indians were forced to line up at the banks to try to convert their cash in new and approved notes. Some even claim the cash ban could actually have a major impact on the economic growth of India in the past and the current quarter.

india-cash-ban-3

Source: bloombergquint.com

India aimed to reduce the size of the shadow economy, but data suggests this wasn’t really necessary as the size of the shadow economy as a percentage of the country’s GDP has been shrinking for several years in a row now. As the majority of this shadow economy has been locked up in tangible assets and real estate, the crackdown on high-denomination rupee bills might miss its target.

On top of that, cash shortages have been reported for the past 8 weeks (confirming the potential impact on the economic growth). One would think the central bank would have an emergency plan ready to go, because after all, the 500 rupee note currently has a value of just $7.35 (using the current exchange rates), so it might not be comparable to the European Central Bank’s move to take the 500 EUR bills out of rotation.

It’s not a secret a cash-less society has been the ‘wet dream’ of policy makers for quite a while now. Pretending it’s a ‘safer way’ to execute monetary transactions whilst preventing the shadow economy to continue to increase in size by cutting down on the larger denominations. Technically, that’s a fair assumption, but you definitely should keep in mind this will reduce the (financial) flexibility of évery participant in the society, and all your monetary movements could easily be tracked whether you have something to hide or not.

The Common Reporting Standard which was initiated last year and will be fully implemented this year (as some countries still had to ratify their participation in CRS) is a next step to get an in-depth overview of the financial flows. In some countries, the tax department will receive more information about the accounts you own abroad compared to your domestic bank accounts.

Big Brother is watching you, and let’s be honest, if the world is full of alleged Russian hackers who have bad intentions, the very worst idea is to force everyone to digitalize all currency. If supposedly important government agencies and political parties can be hacked, why would the banking system be unhackable?

In India, the population was invited to exchange some of its old currency in new bank notes, but the majority of the cash that was brought to the bank was mandatorily placed on bank accounts. An excellent move from the anti-cash perspective, but this case shows how fast a society could implement a cash ban.

And for a bogus reason. This chart was published by  researchers from the University of Manchester and CLEARLY show there is absolutely no correlation at all between the total amount of cash in circulation and the level of corruption…

india-cash-ban-4

Source: blog.policy.manchester.ac.uk

Within HOURS. That’s how fast 86% of a country’s cash stash was deemed to be ‘illegal’ and completely worthless. And this might very well happen in western countries as well.

>>> Read our 'Guide to Gold' to learn how to protect yourself!

Secular Investor offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies are transformed into the Gold & Silver Report and the Commodity Report.

Follow us on Facebook @SecularInvestor [NEW] and Twitter @SecularInvest

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
64n6l4nd's picture

Without mentioning the role of US TAXPAYERS, this article is practically useless.

over 80% consumer transactions in totalitarian china are conducted via mobile, by-passing traditional global banks and instead working through platforms such as alibaba and tencent et al.

In "democratic" India, USAID - a CIA/Wallstreet soft conduit -  has negotiated cooperation agreements with the Indian ministry of finance...[with the] declared goal to push back the use of cash in favor of digital payments in India.


Less than 1 month before modi's cash ban, USAID announced the establishment of "Catalyst: Inclusive Cashless Payment Partnership“, with the goal of effecting a quantum leap in cashless payment in India, stating in its October 14, 2016 press release:

 Catalyst “marks the next phase of partnership between USAID and Ministry of Finance to facilitate universal financial inclusion”.

 

American taxpayers via USAID are committed to India's Catalyst cashless program for at least 3 fiscal years, with no amounts being made public.

 

On the Indian side, the Catalyst project is run by an Indian man who created the biometric company Aadhaar.

 "Catalyst’s mission is to solve  the penetration of digital payments among merchants and low-income consumers. We look forward to creating a sustainable and replicable model."

“The goal is to take one city and increase the digital payments 10x in six to 12 months”

 

“Over 35 key Indian, American and international organizations have partnered with the Ministry of Finance and USAID on this initiative."

They include the Better Than Cash Alliance, the Gates Foundation (Microsoft), Omidyar Network (eBay), the Dell Foundation, Mastercard, Visa, Metlife Foundation, Citibank, the Ford Foundation et al.

the Catalyst-program seems little more than an extended Better Than Cash Alliance, augmented by Indian and Asian organizations.

The above parternship and program coincided with the tenure of India's central banker Raghuram Rajan, who might succeed Christine Legard, worked at the IMF alongside other sociopathic authoritarian cash-haters Ken Roggoff.

He is a member, along with Roggoff and Larry Summers et al, of the Group of Thirty, a rather shady organization, where high ranking representatives of the world major commercial financial institutions share their thoughts and plans with the presidents of the most important central banks, behind closed doors and with no minutes taken.

The interests of the US-companies dominate the gobal IT business and payment systems.

 

so then, what we have is, financial socipathic rotten-to-the-core and irredemable ELITES, using AMERICAN TAXPAYER MONEY, to subsidize...BRIBE their INDIAN and ASIAN wanna be pets, in order to crush the majority of Indians who are poor and use cash.

Remembr what multi-billionaire Steven Schwatzman of Trillion AUM Blackstone said a few years back? "THIS IS A WAR"

 

Less cash = More Power

 

We must let go of comforts and milqutoast thinking, this is a war elites have declared on the rest of society, we did not ask for it.


We can all either aspire to be rotted out and putrid parasites, as our families continue to be gang-raped or we can fight back by violently rejecting any and all forms of elite domination.


http://norberthaering.de/en/home/27-german/news/745-washington-s-role-in...

 

Here is the bottomline: us taxpayers are funding the indian cash ban for 3 years via usaid subsidizing the rich, killing the poor and the weak, all the while pretending the higher moral ground!


 It makes you wonder: why do they hate us?


64n6l4nd's picture

short metlife, its the next aig

 

also go here

 

http://group30.org/publications

rwe2late's picture

 The author failed to note the degree that the US has authored India's cash ban.

The US has been encouraging, pressuring, supporting, assisting, and funding the ban.

The answer to Secular Investor's question is self-evident once that is noted.

YES. IT IS A TEST CASE. (and more)

http://www.globalresearch.ca/a-well-kept-open-secret-washington-is-behin...

http://www.globalresearch.ca/india-from-the-destabilization-of-agricultu...

 

Aubiekong's picture

A cash ban is more likely to happen by  a slick marketing campaign making cash less cool, imposing fees for using cash, and merchants simply not accepting cash at the register.  Its happening already.  None of my college aged kids use cash.  I tell them to keep some cash in their wallet for emergencies (like if their card stops working) and they look at my like I am crazy. 

wholy1's picture

"Test-Access" v3.0?  First, Cyprus, then Austrian bank, now India?

How many "plebs" world-wide have taken anything more than a few seconds note?

GRDguy's picture

About time. I've  been sayin' here "forever" that these are live-test studies:

Zimbabwe, Cyprus, Greece, Venezuela, India, . . . who's next?

These sociopathic banksters are very sick (mentally) people.

American Gorbachev's picture

"Globalists" (read "International Bankers") have been creating and testing 'models' for over 100 years now (after successfully implementing fractional-reserve fiat currencies, they discovered the power that comes from the 'bookend': the command/control economies of WWI.  and they, imo, love control even more than profit)

they created and tested the USSR and NAZI Germany to find the aspects which worked best and incorporated them into their systems post WWII, and subsequently did the same with Japan and the former USSR in the early 1990's (similar on a smaller scale to Wall Street's "Accordion" tactic of merger/acquisition then later breakup/divestiture... profiting both ways, both times)

INDIA is most certainly another 'test' (a rectal barometer to gauge the pressure of public resistance)

if it succeeds, the rest of the developed world will follow within ten years

Grandad Grumps's picture

Corruption is the province of the state and has nothing to do with the form and quantity of money available. It also seems that what the government calls corruption (the subversion or avoidance of its laws) is completely different than what I would call corruption (the twisting and avoidance or morals and ethics).

My guess is that if the U.S. got rid of paper currency it would lead to more independence for the American people. People would have to find alternate ways of transacting and providing aliving than through U.S. government proscribed methods.

CRM114's picture

Already happening.

I live rurally. Increasingly, people are producing goods such as homebrew beer, garden produce, or providing labour, which they then trade for favors in return. Five years ago, people would accept cash for these. In the last couple of years, cash use has decreased. People won't accept it. Instead, one gets offered the chance to return the favor at some later date. Sometimes it's an agreed exchange at the time, more often not. In my experience, everybody seems happy with the arrangement, in terms of getting good value, even allowing for those individuals who occasionally forget to return favors. Partly, this shows how inefficient Governments have become at redistributing money through taxes and services.  It's not huge yet - probably about 5% of the rural economy, but it's increasing. There's also an increase in gifting. People would rather someone they know has something than reveal anything at all to the Government. The cash-based corruption (e.g. not declaring casual income, or misrepresenting sale values) is increasing too.

Iconoclast's picture

Loving the Bloomberg graph accompanying the article. What is a shadow economy? The USA/MIC/NATO secular war economy is probably the third biggest economy there is, war is the real shadow economy.

overmedicatedundersexed's picture

the elite gives cashless a-go in India..are we all not blinded by this brilliance??

meh

jfb's picture

they wont do it the same way in the West. Mot people have already little cash (notes), in Canada it's less than 2% of M1. Changing the rules regarding the amount that you can withdraw from ATMs or banning the use of cash in some sectors, or setting a maximum for a transaction (like no cash payment over 50$) is more likely.

CRM114's picture

Won't work rurally. ATMs too far apart among other things. Lots of people don't even have bank accounts. Cash use is actually increasing where I am.

BandGap's picture

Exciting times!

East Indian's picture

As long as you are not in India.

I thought that the cashless economy is ushered in at the behest of the IMF and the usual suspects of London, but yesterday a friend pointed out an unexpected angle.

We both agreed that $100 notes will NEVER be demonetized, for obvious reasons; and there is no threat of demonetizing any other denomination.

We also agreed that the global demand for physical dollars is going down; but there is a stash of physical dollars outside US that will pour in a torrent into US if the world trade is de-dollarized.

And we also agreed that the US Fed will desperately try to kindle further demands for dollars. Right now dollars are needed mainly for inter-national trade, not intra-national trade.

But "what if all other physical currencies (except the dollar notes) are eliminated?" Then those who need physical money will be forced to seek $100 and other notes for their unaccounted stash and transactions; this will stimulate a perpetual demand for dollar notes from the people all over the world!

Therefore the roots of this evil scheme run well into New York, too.

"They" will eliminate all other physical money, except dollars.

HenryHall's picture

I don't understand why rural India did not move to bartering in silver when this happened.

There are any number of silversmiths in India who could have cranked out 100gram slugs of silver and hallmarked them. And have farmers price things in grams of silver instead of in Rupees.

East Indian's picture

Unfortunately our silversmiths and goldsmiths do not inspire confidence about their products... 

jfb's picture

This theory (where Modi would be an obedient servant ready to destroy his country if the Western bankers order it) seems to have appeared on the website silverdoctors, It was alleged that the goal was to suppress the demand for gold and even drain physical gold out of India. the author of that article had a Western name. The Indian author Jayant Bhandari doesn't seem to claim that in his 6 or 7 articles, simply that Modi is an authoritarian moron who wanted to deprive his political opponents from the $money they need in the next electoral campaign. I tend to believe an Indian like him over a Western writter who probably knows no more than me about India, but your post surprise me since you have an indian pseudo.

But I don't believe that your theory is true.

https://www.federalreserve.gov/faqs/currency_12773.htm  

"There was approximately $1.48 trillion in circulation as of October 20, 2016, of which $1.43 trillion was in Federal Reserve notes.

 http://www.npr.org/sections/money/2013/04/12/177051690/most-100-bills-li..."   here we learn that 70% of the 100$ bills are outside the US, while 77% of all US currency in circulation is denominated in $100 bills (http://www.theatlantic.com/business/archive/2012/11/-100-bills-make-up-8...)

 

So the amount of 100$ notes outside the US would be  $1.43 trillion x 0.77 x0.7=$770 billion. 

770 billion $ is much smaller than the world gdp and much smaller than the amount of electronic currency that is created when third world countries and European countries borrow from central banks a debt denominated in USD. It is also much smaller than the amount of electronic $USD that countries need to maintain to pay their oil imports. The strenght of the USD doesn't stem from the notes, but the strong demand for electronic cash for loans/debt.

GRDguy's picture

After all, the same type of financial sociopaths have drained India of gold and silver BEFORE, via the Honourable Company (British East India Company). Same objective, different technique. Any currency manipulation is simply a great robbery.

That's why The Great Red Dragon is an appropriate symbol for the Money Power. A snake sheds its dead skin and moves on as the same snake.  Out with the old banksters, in with the new. Repeat. 

East Indian's picture

I am an Indian, by birth, and living in India. 

You are mentioning the present availability of US currency notes; but once Indian rupee notes are no longer available, at least a portion of that stash will seek dollars, and that will boost the demand much more. 

$770 billion is about 1% of the world's GDP; it is much less than the 2 - 4% currency in M1, so the US Fed can safely print another $1 trillion in dollar notes and exchange it for goods and services from rest of the world. Exorbitant privilege.

GRDguy's picture

In basic terms, that's why it's called "lyin' and stealin'."

Luc X. Ifer's picture

India is unfortunately a gigantic test lab for anything the western tptb wants to test and practice outside the scrutiny of the western public and still independent investigator journalism.

TeaClipper's picture

It makes sense that the US dollar will be the last man standing. But it wont survive all those homeward bound funds as currencies collapse around it. As you are in India, can you give us any insights as to how PMs are performing since the withdrawal of those bank notes. What are people doing to protect their savings?

 

East Indian's picture

Gold had a peak following the demonetization; in the immediate wake, it even touched Rs 4500 - 6000 per gram ($ 2100 - 2800 per oz), if paid for in old notes. However, since then, prices have fallen; at present it is howvering around Rs 2885 per gram (.995, retailer) - about $ 1335 per oz; the demand is sluggish, as the govt has tightened the controls over cash sale of gold - now you need to produce your Tax Identity number when you buy gold above Rs 50,000. Gold demand will shoot up if these controls are lifted.

 

Gold and real estate are the favourite stores of value; in the absence of digital database of properties, it is difficult to track the ownership of properties. Add to it the difficulties of the Indian system of 'benami' ownership - the beneficial owner hides behind a friend, relative or even servant. Proving such cases is next to impossible, so not much can be done. 

 

Silver has appreciated a bit, but people do not covet it as much as gold.