Crisis in India
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This is getting surprisingly little news coverage (compare the minutia of the US): I first heard about this on the criicket.
http://www.economist.com/blogs/economist-explains/2016/11/economist-explains-6
Quote:In a surprise televised address on the evening of November 8th, Narendra Modi, the prime minister of India, delivered a bombshell: most of the money in Indians’ wallets would cease to be accepted in shops at midnight. The two most valuable notes, of 500 and 1000 rupees ($7.50 and $15), were to be “demonetised”, economist slang for taken out of circulation. Indians have until the end of the year to visit banks to either exchange their cash against newly printed notes or deposit it in their accounts. After that, their notes will become mere pieces of printed paper with no value at all. Citizens and businesses face weeks or months of disruption as the new currency stock is deployed. So why bother?Imagine the government her rescinding the fiver with no warning? As the article notes, this is about forcing people to declare wealth: but this is a move that will disrupt an economy of 1.2 billion (IIRC) and likely to cause inflation.
Could this be a good example of how politicians and the state can't control but can break capitalism?
There are daily articles re the effects of this on http://www.countercurrents.orgAs one can imagine mostly affecting the poorest of society. The notes cannot be used to buy food and medicines and other daily necessities. There have been a number of deaths daily, apparently as a direct result.
Another reason why our blog should be on every member's daily internet visit as we reported it on the 9th of November although we have not posted about the serious consequences which Janet has pointed to although like Janet i have also been following the harrowing tales on the Indian-based CounterCurrent website. http://www.countercurrents.org/2016/11/17/death-by-demonetisation/I, for one, if i had remained living in Kerala would have been very vulnerable to having no money for living expenses as all my cash came via ATM withdrawals, and now they have run out of lower denominations of money. However, i would have managed by using the debit card directly at the larger department stores or one of the large hotels to buy goods and meals, forgoing the need for hard cash, which is a facility few poor Indians are able to avail themselves of.
I think the nominal reason given was to make things more difficult re exchange and buying and selling in the so called black economy and the tax dodging off the books cash in hand system etc. Which goes on over here as well VAT free and even income tax free builders, central heating installation etc etc. However it might be a bit more ‘insidious’ than that as it has been recently followed up by rumours that they are going to ban gold imports as well. The real reason is that they might want to pull in cash savings back into the banks as many sensible Indian housewives don’t trust the banks and keep their savings out of the system in bundles of paper rupees stuffed under the bed. http://www.bbc.co.uk/news/world-asia-india-37935738 %5BIt is hard to imagine that they are worried people are going to start using gold instead of large denomination paper for off the books exchange- who knows.] It is possible that there is trouble around the corner, with Non Performing Loans etc, and the banks feel as they are going to need other people’s cash deposits to carry them through it- or to ride out a bank run. http://economictimes.indiatimes.com/industry/banking/finance/banking/indian-banks-need-90-billion-capital-by-financial-year-2019-fitch/articleshow/53062705.cms https://en.wikipedia.org/wiki/Executive_Order_6102
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