We have already commented to you again in this blog that with the states accumulating debt and with uncontrolled public deficits the global trend is to slowly confiscate all the confiscable wealth.
To be able to do it effectively there is no better instrument than to convert all economic transactions into electronic transactions and eliminate money in cash. A money in cash that on the other hand, since any type of gold standard was eliminated, is a fiat money that has no more value than what we believe it may have.
Remove bills with higher denominations
Well, in India, a country of more than one billion inhabitants, the government took a week ago the decision to suddenly remove bills with higher denominations, which is causing authentic panic scenes in the country to start the population is aware that faith in cash is simply an act of faith in the goodness that a government can have in respecting it.
Fact: On November 8, the Indian government announced that the use of 100 and 500 rupee bills representing 86% of the cash in circulation in the country was prohibited.
What has happened in India?
On November 8 in an unscheduled televised appearance, Indian Prime Minister Narendra Modi declared that the 500 and 1,000 rupee tickets were to cease to be legal course tickets only 4 hours after his announcement. More than 86% of the banknotes in circulation in the hands of the Indian citizens were automatically converted into pieces of paper without any value.
An hour later, the Indian government announced that new 500 and 2,000 rupee bills were going to be issued. Indian citizens are given time until December 30 to exchange old 500 and one thousand rupee bills for legal course tickets or deposit them in bank accounts.
The official motive of the Indian government to eliminate bills with higher denominations is to be able to combat crime more effectively, as if criminals were not able to adapt and exchange banknotes transactions for other means of payment they may have and keep a true value how gold can be.
Those who directly affect the measures are hundreds of millions of citizens in an economy where 90% of transactions are made in cash. The result is that Indian citizens have been doing long queues for 9 days to enter the banks of higher denominations before they lose their full value, the economy of the country sees how it is becoming totally paralyzed when the transactions that are being cut made in high denomination bills.
According to the plan of the Indian government, the 500 and 1,000 rupee bills can be exchanged for coupons, coupons that can be converted back into money provided that the person making the change provides an identification document. The main problem is that about 300 million Indian citizens do not have any type of identification or access to the banking system.
The deadline to convert high denomination bills is December 30 with an important condition, each person can not convert more than 2,000 rupees (about 30 euros). In other words, the bulk of India’s money supply will be “vaporized” by order of the Government and millions of citizens will see how many of the bills they had in their pocket have run out of value.
The Indian economy is an economy that works based on cash. 90% of the transactions transactions are made in cash and the bulk of them with legal operations, small amounts and made by people who have no economic capacity to pay taxes.
Who will it affect the most?
Eliminating high-denomination banknotes in India will have a very different impact on different social classes.
For the richest groups of people or criminal organizations the elimination of the highest denomination bills will be a minor inconvenience. The bulk of their wealth is not in rupees but in other assets and / or currencies. The impact for them will be marginal.
The middle class will create more inconveniences, basically logistic in the first months after the vaporization of the highest denomination bills.
Needless to say, the main impact will be for the bulk of the population living in poverty. We talk about the man who sells flowers at a traffic light, the 12-year-old boy who sells pirated DVDs on the street, or the waiter who makes home deliveries. In other words, the millions of Indians who carry out legitimate activities in the “informal” economy in order to survive. Most of them do not have identity documents, do not have bank accounts and the bulk of their savings is in the form of high denomination bills.