India's Incredible Banknote Switchover

O

Oscurito

You can't fault the guy for zeal and ambition. And the fact that he managed to achieve his coup with no advance leaks to the media or well-established financial interests in a country like India is nothing short of astonishing.

So, what am I referring to?

On November 8th, while the world was agog with events in another large democracy on the other side of the world, Indian Prime Minister Nardendra Modi went on national TV to announce that the high denomination 500 Rupee and 1000 Rupee notes would no longer be legal tender. They can be used in hospitals or at government ownded petrol pumps. Otherwise, they must be deposited in bank accounts or exchanged for the legal tender notes such as the new 2000 rupee denomination up until Dec 30th. But the banks must alert tax officials of any transaction over 250,000 rupees.

In one fell swoop, huge amounts of money used in crime and terrorism or earned legally but not taxed is being brought within the system. India has a huge problem with the black economy and - as the graph below shows - the tax take as a percentage of GDP is low by international standards. This once-off measure will fix things for a while but what's more important is the undermining of faith in what should be an outmoded commodity: hard cash.



Of course, there have been logistical problems in India, but the future is electronic cash - convenient, safe, traceable and easy to refund, if required. The wonder is that cash has survived as long as it has. But when society finally abandons it, it will be a huge blow against crime and terrorism.

As an aside the European Central Bank might consider taking a leaf out of Modi's book with respect to the 500 euro note (below) which is an absolute Godsend for every criminal from Limerick to Larnaka. Draghi et al have realised this and - and in a charmingly useless Brusselsy sort of way - are withdrawing it gradually. Gradually. So every scumbag can bring his stash of illegal cash in small amounts and get them exchanged for smaller notes.

That's not the way to do it, folks. Have a chat with Mr Modi.

India invalidates large bank notes in crackdown on crime, terrorism and corruption.

 
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D

Deleted member 48908

I believe that this is just as big a reason as anti-counterfeiting that the US changes notes every few years.
 
O

Oscurito

I believe that this is just as big a reason as anti-counterfeiting that the US changes notes every few years.
Tax is a huge issue in the USA and a lot of people view Big Government as being all bad.

I'd say Europe will go all electronic long before the USA.
 
D

Deleted member 48908

Tax is a huge issue in the USA and a lot of people view Big Government as being all bad.

I'd say Europe will go all electronic long before the USA.
God help the squirrel population if it does.
 

Karloff

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Joined
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Messages
6,952
This once-off measure will fix things for a while but what's more important is the undermining of faith in what should be an outmoded commodity: hard cash.
There is a global and globalist movement to abolish cash, leaving everyone at the mercy of electronic measurements. The arguments they are using are the ones you mention, tax evasion and fighting terrorism.

My you must have great faith in the integrity of governments and banks to want to give them such power. They would place the concept of wealth itself into the hands of bankers, all our wealth - in their hands, what could go wrong? They are such transparent and upstanding citizens as we learned so well in 2008.
 
O

Oscurito

There is a global and globalist movement to abolish cash, leaving everyone at the mercy of electronic measurements. The arguments they are using are the ones you mention, tax evasion and fighting terrorism.

My you must have great faith in the integrity of governments and banks to want to give them such power. They would place the concept of wealth itself into the hands of bankers, all our wealth - in their hands, what could go wrong? They are such transparent and upstanding citizens as we learned so well in 2008.
Karloff, a stór....?

Where the hell do you think the cash comes from in the first place? Who produces it and controls its value?

The big evil banks. Or specifically one called the ECB.

If you don't trust the banks then go back to bartering or set up your own currency or something. But don't delude yourself into thinking that you're all cool and independent when what you have in your wallet is just a paper representation of an electronic transaction.
 

stopdoingstuff

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Messages
22,400
Thank God we have all those totally unhackable computer systems.
 

stopdoingstuff

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Feb 26, 2011
Messages
22,400
Also, thank God for gold and silver, because at the end of the day they are insulation against this sort of thing.
 

Orbit v2

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Joined
Dec 8, 2010
Messages
11,963
I believe that this is just as big a reason as anti-counterfeiting that the US changes notes every few years.
Old notes remain legal tender though. That's part of the reason why the US $ is the world's reserve currency and India's currency isn't. You can stuff $100 in a mattress and be sure in 20 years time, it is still $100.
 
O

Oscurito

Old notes remain legal tender though. That's part of the reason why the US $ is the world's reserve currency and India's currency isn't. You can stuff $100 in a mattress and be sure in 20 years time, it is still $100.
But could you bring them to your average shop on the Main Street and buy stuff with them? Or would you have to go to a bank?
 

kerdasi amaq

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Joined
Aug 24, 2009
Messages
4,683
Insulation against what sort of thing?
Insulation against idiotic politicians insisting that the People keep their money where light-fingered bankers can steal it.

Remember the Cypriot bail-in. It'll happen here the next time the bankers go bust courtesy of our professional politicians(they already voted for it).
 
O

Oscurito

Insulation against idiotic politicians insisting that the People keep their money where light-fingered bankers can steal it.

Remember the Cypriot bail-in. It'll happen here the next time the bankers go bust courtesy of our professional politicians(they already voted for it).
It's not about the form in which one's wealth is stored, it's about where it's stored.

By the way, even if all transactions are electronic, that doesn't mean that banks or any financial institutions need be involved in any way at all.
 
D

Deleted member 48908

Old notes remain legal tender though. That's part of the reason why the US $ is the world's reserve currency and India's currency isn't. You can stuff $100 in a mattress and be sure in 20 years time, it is still $100.
True enough.
 
D

Deleted member 48908

But could you bring them to your average shop on the Main Street and buy stuff with them? Or would you have to go to a bank?
They're legal tender, as long as you're not going in with bills that are very old. Mass quantities of them might raise an eyebrow though.
 

Fractional Reserve

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Joined
Apr 30, 2011
Messages
8,158
Real statist stuff , hunt down and control , if money goes digital for the domestic economy people can forget about their freedoms government and their jackboot statist will control .
The good thing is people always come up with innovative ways to get round the system .I expect their will be loadsa likes from ps ,cs , pbp,
Left wingers of all colours
You can't fault the guy for zeal and ambition. And the fact that he managed to achieve his coup with no advance leaks to the media or well-established financial interests in a country like India is nothing short of astonishing.

So, what am I referring to?

On November 8th, while the world was agog with events in another large democracy on the other side of the world, Indian Prime Minister Nardenda Modi went on national TV to announce that the high denomination 500 Rupee and 1000 Rupee notes would no longer be legal tender. They can be used in hospitals or at government ownded petrol pumps. Otherwise, they must be deposited in bank accounts or exchanged for the legal tender notes such as the new 2000 rupee denomination up until Dec 30th. But the banks must alert tax officials of any transaction over 250,000 rupees.

In one fell swoop, huge amounts of money used in crime and terrorism or earned legally but not taxed is being brought within the system. India has a huge problem with the black economy and - as the graph below shows - the tax take as a percentage of GDP is low by international standards. This once-off measure will fix things for a while but what's more important is the undermining of faith in what should be an outmoded commodity: hard cash.



Of course, there have been logistical problems in India, but the future is electronic cash - convenient, safe, traceable and easy to refund, if required. The wonder is that cash has survived as long as it has. But when society finally abandons it, it will be a huge blow against crime and terrorism.

As an aside the European Central Bank might consider taking a leaf out of Modi's book with respect to the 500 euro note (below) which is an absolute Godsend for every criminal from Limerick to Larnaka. Draghi et al have realised this and - and in a charmingly useless Brusselsy sort of way - are withdrawing it gradually. Gradually. So every scumbag can bring his stash of illegal cash in small amounts and get them exchanged for smaller notes.

That's not the way to do it, folks. Have a chat with Mr Modi.

India invalidates large bank notes in crackdown on crime, terrorism and corruption.

 

Fractional Reserve

Well-known member
Joined
Apr 30, 2011
Messages
8,158
Anyone that ever got audited by the revenue know what information on bank accounts they have , plus if you owe them a few quid they won't be long freezing it .
If money becomes totally card based people can forget about privacy and freedom .

Insulation against idiotic politicians insisting that the People keep their money where light-fingered bankers can steal it.

Remember the Cypriot bail-in. It'll happen here the next time the bankers go bust courtesy of our professional politicians(they already voted for it).
 
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