What has just happened in India is unique in the world and in history.
The Indian government wanted to fight corruption. To do so, it decided overnight to demonetize the 500 and 1000 rupee bank notes. This represents 86% of the value of the currency used in India!
This means that these bank notes can no longer be used anywhere to pay anything. This does not mean that these 500 and 1000 rupee bills are worthless. Indian citizens are “incentivized” to trade them for new bank notes of 500 and 2000 rupees.
Needless to say, this measure has caused an unnamed chaos in India, since no one, from the richest to the poorest, pays anything without going through the cash.
The worst thing is that ATMs have not been reconfigured to accept these new bank notes because the government wished to keep the operation secret. It was therefore impossible to technically prepare this legal forfeiture.
The government realized, but too late, that cash was not only used by the rich fraudsters, but also by the common people. Even e-commerce sites work with cash, because it is when the product is delivered that the payment in cash takes place.
The Indians will have to wait several weeks before seeing things get back working as usual.
Why does it matter?
In fact, that’s a huge change because, apart from an equivalent amount of 4000 rupees (approximatively €55 or $58), all the balance has to be deposited to a bank account and the withdrawals are capped.
The official aim of the Indian government is to fight against black money, which is used for local corruption and tax evasion. Keep in mind that only 3% of the population pays income taxes in India because lot of people are very poor.
But now, the Indian tax authorities will have access to the bank accounts. Their owners will have to explain the origin of the funds! Fraudsters risk a penalty of 200%, which means that lot of money will be swallowed up by the tax authorities.
We have to learn from this lesson
Without cash, impossible to withdraw savings and avoid to get taken to the cleaners
The disappearance of cash is a dream for governments.
Remember the Greek crisis, when the Government decided, with the help of the banks, to cap withdrawals to €60 per day (while still allowing tourists unlimited withdrawal). This decision was taken against people will, after a referendum where the majority of Greek people said NO to the EU austerity program (read the story here)
Think of governments to propose new laws to regulate and control cryptocurrencies.
Governments will be able to lock your bank account(s) for any reason. This has already happened recently in Belgium when the government decided to block the account of "alleged terrorists" without any decision of a judge.
Without cash you cannot escape such arbitrary action.
The disappearance of cash is a dream for bankers.
Without cash, banks will be able to apply negative interest rates on our savings, which means we will have to pay to keep our money safe at the bank while the bank use it to make money.
If we have cash, we could refuse to hold our money in the bank and withdraw our savings.
Without cash, we will have no escape!
We are all sheep who will get fleeced sooner or later if we don't resist...now!
We all should meditate on it ...
Thanks for reading!
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