In order to fight corruption in the “grassroots economy,” India’s government announced earlier this month that it would no longer recognize the 1000 and 500 rupee notes as legal tender by mid December (500 rupees is about $US7.50). It has set off a nationwide shortage of still legal 100 rupee notes as citizens who operate primarily in the cash economy have struggled to exchange bank notes.
Reports are up to 70 people have died waiting in long lines at the banks and the government is further restricting how the soon to be demonetized notes can be legally used. So Indians are coming up with creative ways to get around the restrictions and ditch their soon to be worthless notes.
Why India took this drastic step Here
Coming soon to the good old USA unless we push back HARD!
What it boils down to is the fact that India’s elites are unable to tax the peasants into further poverty. Indians aren’t dummies. They’ll resort to barter, or make their own currency out of gold or rice or tea or something else of value.
The corrupt are being paid in non-taxable money and that cannot be allowed.
“Corruption” at the lower end of the economic spectrum (or “favors”) is the bedrock of all 3rd-World nations’ economies. I’m guessing (I have no evidence) that their gov’t issues a plethora of regulations and rules that stifle activity – and the peasants have little choice but to “grease the wheels” of the regulatory state in order to get anything accomplished – which includes activities that feed their families.
izlamo delenda est …
Gold ban on its way.
http://www.thenational.ae/business/economy/not-a-very-golden-time-for-gold-in-india
I don’t get it. Why don’t the Indians just go back to using wampum, like they did a long time ago?
Oh, wait —
Isn’t it time to re-examine the almost universally held assumption that govt has some legitimate role in establishing and controlling our money, our media of exchange? If you believe that the free market is the moral way for free people to voluntarily deal with each other, then why are so few advocating getting getting govt out of the money/currency bidniss?