Indian Economy Grinds To A Halt After Cash-Ban: "Faith In System Shaken"

Zerohedge ^ | Nov 17, 2015 | Tyler Durden

[Former Proud Canadian]

Amid scenes of panic across India, following PM Modi's shock decision to withdraw high-value bills in the middle of the sowing and wedding season, Reuters reports the move, aimed at cracking down on the shadow economy, has brought India's cash economy to a virtual standstill. With over 90% of all transactions done in cash, money flows in and out of the black-and-white system... until now, as Devangshu Datta exclaims, "The system works because everybody believes that those pieces of paper will be accepted by everybody else... This move has shaken that trust."

Farmers have been left stranded as traders have no cash to pay for their produce, while millions of Indians lined up outside banks and post offices for the ninth day to exchange old banknotes or withdraw rationed money from their accounts.

[Former Proud Canadian]

This is a fascinating story that is being entirely overshadowed by the US election. India has basically called in all of its paper currency notes over the equivalent of $10US. Since 90% of the Indian economy runs on cash you can imagine the turmoil.

[PGR88]

More socialism, statism and fascism in action.

Watch the results carefully, because it is what every central bank and government in the West wants to do as well.

[captain_dave]

The Indians might start using foreign notes instead of rupees

[Flavious_Maximus]

A ten dollar note is much to small a currency to have in large quantities.

Imagine you purchase groceries that cost $150, you would need to have 15 ten dollar bills in your possession to pay for it.

This would not be acceptable here.

[Former Proud Canadian]

Yeah, that’s why its fascinating for me. Kind of like a case study in how to recall all your fiat currency.

[Wolfie]

Gee, I hope this doesn’t affect the bottom line of all those U.S. companies that offshore to India.

[DJ Taylor]

I wonder if Obama’s multi-billion dollar cash ransom payment to Iran had anything to do with this lose of faith in cash money in this part of the world?

[Yollopoliuhqui]

Globalist test run.

[KarlInOhio]

Hillary proved that you don't need bags of large bills to keep the wheels of corruption well lubricated. Blatant and easily traceable electronic transfers work just as well if you have a government that squeezes its eyes shut to evidence of corruption. Thus if politicians no longer need stacks of hundreds you don't either, peasant.

[fella]

You say you want a revolution . . .

This is how you start one.

[Former Proud Canadian]

That's the first thing I thought of. If you had a hoard of US$ instead of rupees you would be doing very well now, don't you think? Gold and silver coins would be good as well.

I can't see this happening in Canada. The switch to US currency by the public would be instantaneous. I have more US cash at home right now then Canadian.

I can see it happening in the US, though, which would make my US dollars worthless. There is an ultimate hedge against this nonsense. Read my tagline.

[vikingd00d]

>>Gee, I hope this doesn’t affect the bottom line of all those U.S. companies that offshore to India.

With trust in rupees in free-fall, they could just start offering cash payments in USD instead at a very profitable conversion rate.

[Former Proud Canadian]

Absolutely.

[citizen]

More socialism, statism and fascism in action.

---

Nah...doncha think this is probably Pres-Elect Trump's fault? I mean surely our election season & this Indian cash call happening at the same time aren't just coincidences. /s

[RayChuang88]

But isn’t the Indian government issuing brand new paper currency based on a different denomination of Indian Rupees because there was an issue with counterfeit currency coming in from Pakistan?

[MrEdd]

SHhhh. You’ll spoil the thread.

[headstamp 2]

Government policies force an underground economy.

The government responds by banning cash.

Look for it to happen here too.

[Grams A]

We always use cash when we are traveling on vacation. Cost to fill tank can run up to close to $60 so we always have a few $50’s. Were amazed this summer at how many places now take nothing larger than a $20. When asked, the response always had something to do with being afraid of getting counterfeit bills. Counterfeiters don’t make tens and twenties?

I can understand quick shops not taking any cash. May make them less susceptible to being robbed. Large amounts of cash are an accounting nightmare, require trips to the bank, and transactions are subject to clerical error.

Seriously considering exchanging cash for a gift credit card on future trips.

[null and void]

Imagine you purchase groceries that cost $150, you would need to have 15 ten dollar bills in your possession to pay for it.

This would not be acceptable here.

Neither is not having food.

Given a choice between accepting shopping with a wad of banknotes and starving, which would you do?

[WKUHilltopper]

The push for digital money—the globalists are going for broke. When they control your money and how you will use it, they’ll control everything about you. Say something they don’t like? They flip a “switch” and you have zero access to your own money.