The War on Cash: An Update for India

The War on Cash: An Update for India, by Jeff Thomas.

In the last year, several countries have, as a part of the War on Cash, begun removing larger bank notes from circulation in order to force people to perform all economic transactions through the banking system, assuring that the banks would gain total control over the movement of money.

Of course, the banks could not admit their true goal to the public. They instead used the governments to claim that the measure was being undertaken to restrict crime (money laundering, drug deals, black marketing, terrorism, etc.)

Recently, without any fanfare, ATM’s in Mexico have ceased issuing the 500 peso note US$24). The largest note is now the 200 peso note (US$10).

India:

India has joined those countries that have done away with larger notes. They did so quite suddenly and the effects are already being felt by the Indian people. The elimination of the 500 rupee [US$7] and 1000 rupee [US$14] notes has, of course, not limited the level of spending in India, but it has caused a sudden demand for considerably more smaller notes through which to accomplish the same transactions.

A problem with the removal surfaced immediately when people using ATM’s were withdrawing far more notes than ever before in order to have enough cash to function normally. The ATM’s were quickly being emptied of the smaller denominations. The people of India cried foul, as 86% of all money in circulation had vanished from the system overnight. The limit for withdrawal per day is 2500 rupees (US$37) — which for some is sufficient to pay for daily expenses, but is most certainly not sufficient to carry on a business or facilitate larger transactions.

Although deliveries of notes to the ATM’s has increased … the delivery trucks not meet the demand, the machines cannot store the volume of notes needed.

The result has been a partial breakdown of commerce. With millions of people beginning each day with insufficient funds to function, one bi-product of the money shortage is that over 9.3 million trucks have simply been abandoned by their drivers. (Nearly two thirds of all freight in India moves by road.)

Food shortages and economic collapse? It the war on cash is mismanaged as in India, or if having all money in the banking system for the first time ever in history runs into some major problem, severe dislocations could follow.

The problem reaches its nadir when trucks that move the country’s food come to a halt. As long as sufficient food remains available to us, we treat it as just another commodity. But unlike clothing, hardware, vehicles, etc., when our source of food is cut off, even for a very short period, we become frightfully aware that its level of importance is far beyond that of any other commodity.

It’s been said that the average person abandons his moral inhibitions after three days without food. After this time, an otherwise morally responsible man is literally prepared to kill his neighbour for a loaf of bread.