India's Cash Ban Is Really a War on Gold

On November 8, Prime Minister Narendra Modi of India declared that the use of existing 500 and 1,000 banknotes would no longer be accepted as valid legal tender. He announced the issuance of new 500 and 2,000 banknotes in exchange for the old banknotes. This decision has wrecked havoc on the Indian population.

Government’s Demonetisation Shock Has Hit the Poorest the Most - The Wire, November 13, 2016

'...the world is watching the bizarre spectacle of millions of Indians waiting in long, unending queues to recover their own money from banks, post offices and ATMs even as the government at the Centre remains firmly in denial about the untold hardship to the poor who cannot afford to stay away from their daily wage work even for a day. Some senior citizens have died of exhaustion standing in queues for hours on end. Families have suffered as private hospitals refuse to take currency notes of 1000 and 500 denomination, legal tender just till the other day.
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It is now becoming clear that the sheer magnitude of the ongoing exercise of replacing 85% of all currency in circulation was not fully thought through in terms of its logistical complexity. Its basic economics  and ability to prevent future black money generation is also questioned by many. No wonder, developed as well as emerging economies have rarely resorted to demonetisation of this magnitude i.e replacing 85 % of all currency in circulation. To put things in perspective, India’s own demonetisation exercise in 1978 had resulted in less than 5% of the total currency being replaced. The well regarded economist Prof Kaushik Basu, till recently Chief Economist of World Bank, has said demonetisation per se is not good economics as the collateral damage could far exceed its benefits.'

Interestingly, some have benefited, albeit temporarily...

For the first time in India, the rich beg the poor to help them  - The Sydney Morning Herald, November 18, 2016

'Maids, drivers, nannies, and cooks in India are experiencing unusual politeness from their employers. Beyond the work they do every day, they suddenly have another use – to launder the undeclared cash which the rich have been hoarding in steel wardrobes, under the mattress and in under-bed storage.

This sudden outbreak of niceness is the outcome of India's current crackdown on "black money" - income in the form of cash that has not been declared to the tax authorities. On November 8, the day before Sharma's employer became a lamb, Indian Prime Minister Narendra Modi scrapped 500 and 1000-rupee notes to root out corruption and force more Indians into the tax net.

In one fell swoop, the tens of millions of rupees that the rich kept at home in these denominations became worthless. If they deposit the money in the bank tax officials will pounce, imposing staggering penalties and taxes.

However until December 30, each Indian is allowed to deposit a smallish sum of 250,000 rupees in such defunct notes in their bank accounts without questions being asked. That is why the rich need the service of the poor.'

Regardless, I agree with Jeff Berwick, in that this move is not about rooting out corruption but about confiscation.

The War On Cash Goes Nuclear In India, Australia and Across The World - Dollar Vigilante, November 15, 2016

'A few days ago we wrote (here) about how the Reserve Bank of India eliminated 500 and 1000 rupee banknotes from the money supply. These notes represent 20% of the cash value in circulation and 80% of cash outstanding in the country.

The main reason India has been combating cash in conjunction with selling off gold, is because people in the “black” or “free” Indian marketplace were supposedly circumventing the financial system by conducting business and then slowly buying physical gold with large denomination bills.

Since the transactions were not being tracked or monitored, it was much easier to hide earnings from the government trying to extort them. So naturally, being a greedy crime syndicate that operates parasitically on extorted funds, the government is putting a stop to something that it views as an ongoing, expanding threat.

Of course, there’s a reason why Indian women wear their wealth – gold and silver – on their bodies. Indians have been through this before. Indian societies are very old, perhaps the oldest in the world, and they’ve gone through numerous metals confiscations in the past.

Of course, what’s going on is not being described as a “confiscation.” So far, reasons to remove cash are not coordinated. In India, it’s because of “corruption.” In Australia, it’s supposedly because customers simply don’t want or need cash.'

Chris Campbell agrees and speaks of the eventual move to ban gold...

War on Gold: Is India Proof Elites Want to Confiscate Gold? - Laissez Faire, November 30, 2016

'The real modus operandi is blatant. It’s not, at its core, to fight illicit funds. This move is to drain private wallets into the government’s coffers. Just imagine, from Modi’s perspective, the immediate rupee jackpot…

Since 90 percent of economic transactions are in cash, White and Rajagopalan point out, if only “20% of the old notes are never turned in, the government’s revenue windfall is up to Rs. 2.9 trillion ($42.5 billion).”

The demonetization strategy, in the end, of course, won’t do much to fight tax evasion, government corruption (that’s a laugh), or “black wealth.” The richest black marketeers of India very likely already had their wealth diversified out of rupees in things like tangible assets (such as gold and real estate), foreign currency and offshore bank accounts, corporate shares, and on.

Modi’s scheme will only incentivize more movement out of the rupee from all classes. For example, according to Delmia, the poor are already buying jars of Tide for barter, “giving new meaning,” she quips, “to the term money laundering.
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As Dalmia mentioned, this war on the private economy is far from over: “… you can be sure that Modi, who has already warned of further action before the end of the year, will go after gold and other assets next. He’s already raised excise duties on gold and requires jewelers to check the tax identification card of anyone purchasing gold worth over $3,000, echoing India’s notorious 1968 Gold Control Act that criminalized gold holdings by private citizens.”

And you’d be wise to pay attention. Because India’s simply pulling from the global elite’s playbook. What’s happening in India could happen anywhere.'

Stewart Dougherty even asserts that PM Modi is an agent for the elites who are desperate and need to suppress gold demand..

The Deep State’s Attempt To Suppress India’s Gold Demand - Investment Research Dynamics, November 29, 2016

'...the primary objective of the Indian currency demonetization was to sharply reduce gold demand in the world’s most important retail market, India, one that is controlled by the Deep State oligarchy via a captured agent, its Prime Minister. The manner in which the demonetization was carried out indicates some kind of desperation, because it defied all economic prudence, logic, humanitarian regard and common sense. India is the only country where this kind of attack on demand could have been carried out, and this is why it occurred there. It indicates to us that the bullion banking cabal is coming up against the wall, and that there is severe supply – demand stress in the global gold market that is rapidly becoming non-containable. Desperate times are producing desperate measures by the manipulators.'

The correlation with this announcement and the US election is striking..

Is This The Reason Why Gold Prices Are Plunging? - Zerohedge, November 24, 2016

For a global perspective, Simon Black provides examples of other countries like Switzerland, Singapore, Japan and the United Arab Emirates that are in the same position as India. 

An interesting perspective on the War on Cash - Sovereign Man, November 30, 2016

'Bottom line, the political and financial establishments want you to willingly get on board with the idea of abolishing, or at least reducing, cash.

And they’re pumping out all sorts of propaganda to do it, trying to get people to equate crime and corruption with high denominations of cash.

Simply put, the data doesn’t support their assertion. It’s just another hoax that will give them more power at the expense of your privacy and freedom.'

and in case you think the United States is immune from these ideas, think again..

'...former US Treasury Secretary Larry Summers published an article last week stating that “nothing in the Indian experience gives us pause in recommending that no more large notes be created in the United States, Europe, and around the world.”'

In other words, despite the India chaos, Summers thinks we should still curtail the $100 bill.

Unfortunately, we are seeing signs of the social upheaval, which is probably what these 'elites' want anyway...

Mobs Lock Up Bankers During India's Cash Chaos - Bloomberg, November 30, 2016

'Bankers are bracing for long hours and angry mobs as pay day approaches in India, the first test for Prime Minister Narendra Modi’s move to invalidate almost all cash in circulation.

"Already people who are frustrated are locking branches from outside in Uttar Pradesh, Bihar and Tamil Nadu and abusing staff as enough cash is not available," said CH Venkatachalam, general secretary of the All India Bank Employees’ Association. The group has sought police protection at bank branches for the next 10 days, he added. "This is the fallout of one of the worst planned and executed government decisions in decades."'