INDIA'S NIGHTMARE!

INDIA'S NIGHTMARE!

     Some years ago, when he was elected as the new Prime Minister of India, Narendra Modi was variously described as either "The Savior of India" or "India's Worst Nightmare!"

For some he has become the worst nightmare! 

     All countries seem hell-bent on destroying their currencies. They do it by spending more money than they take in. Since they all live beyond their means by promising things they cannot deliver, they must create more money out of thin air. The more money in circulation, the lower its individual value and the more things cost. Sometimes such activity is not readily noticed, but at other times, particularly in times when things get completely out of control, governments are induced to "do something." And boy, do they! It is purely draconian!

     India's currency problem drives middle and upper class people into Gold. It is simply a time-tested means of retaining value. It is also a primary means of dowry in India. It's price may vary over time, but its value cannot be debased because it takes time and capital to find and manufacture the metal. 

     India makes the same mistakes as other countries have. They know that Gold is the enemy of their paper notes, so they try to restrict its importation by taxing it. That makes Gold expensive. The intent is to keep people from buying the metal and instead invest in currency. Eventually, Gold smugglers decide that they can make a profit by smuggling gold and selling it on the black market. This enrages the powers that be so they make it illegal to import without tax. Since smugglers are not deterred by that as long as there is demand, they continue. This leads the government to take more serious measures. Since smugglers use notes to buy and sell Gold, the Government of India decided to arbitrarily and without prior notice, suspend the value of notes, effectively but temporarily ending smuggling. But smugglers are always smarter than governments, they simply will move to other currencies or use a barter method to accomplish their goals.

     The problem with killing the notes and making them worthless, is that millions of people in India who are very poor, need notes to survive. By killing the value of the notes and making them worthless, these people are ruined. Instead of killing off smuggling, this idiotic policy destroys the people who most need money in the form of notes. Such policy is a symptom of insanity.

     An Indian friend of mine who is American educated, lives in India and is CEO of a company there, writes me there are millions of people in India who have been devastated by this policy!

   He further writes that this has created chaos: "Half (our) nation does not have electricity. Quarter (of our) nation has no bathrooms. 85% (of our) nation never uses internet. Baby girls are killed. Only 2% of all sales happen online and in that 98% are cash on delivery. Leaders these days are living in Facebook and Twitter and its leading to a total disconnect with the majority. I travel a lot especially to the poor folks. I went into this slum kind of area yesterday. A guy saved up to buy a bike for his would-be son in law as dowry. To buy a bike you don't need a bank account or tax number. Just give cash and drive off. Since the notes he had were useless, the marriage got called off. Many folks (are) like this, a farmer dies of (a) heart attack because his notes were useless."

     He also says:  "Ours is a country dependent on hard cash. Poor folks are panicking. Our PM (Prime Minister Modi) only talks great like Obama. So in order to do something he did this. There are 30 million in our country who do not have access to a toilet, yet instead of trying to do something more important, they did this. Our earlier RBI (Reserve Bank of India) governor Rajan was fired because he didn't let the govt do such crazy stuff."

     He also makes the point that what India needs is a "Trump" and that may happen in their next election come 2019. This fellow is pretty sharp. Four months ago he predicted a Trump win this election in the United States! He was right!

     The current situation is a tragedy for the people of India. To add insult to injury, they have now printed new notes with Gandhi's image on them! Gandhi would turn over in his grave to see his image misused like that! The worst part is, instead of exchanging bills to perhaps deter smuggling, the government of India made them worthless. The people have to start over. Can this sort of thing happen elsewhere including here? Yes indeed, the "war on cash" may spread. Unfortunately, it is stuff like this of which popular revolutions are made!

Posted 

by

 Harald Hesstvedt Scharnhorst