The Global War on Cash, India’s Demonetization Debacle

Published on naked capitalism (first on The National), by Jerri-Lynn Scofield, Dec 31, 2016.

… Jerri-Lynn Scofield … has worked as a securities lawyer and a derivatives trader. She now spends most of her time in Asia researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as writes occasional travel pieces for The National.

December 30 has now come and gone– the last day for people to exchange old INR 500 (worth USD 7.36) and INR 1000 (USD 14.72) notes– that were no longer legal tender after Indian Prime Minister Narendra Modi launched his demonetization policy on November 8. At a stroke, the policy withdrew 86% of Indian currency from circulation. Holders of old currency notes could exchange them for new currency, but only up to a limit of 4000 INR per person. Sums above that threshold had first to be routed through a bank account– in a country where only about half the population has a bank account– and then withdrawn later, subject to weekly caps on such withdrawals.

I have written about the policy in three previous posts, India Moves to Severely Restrict Use of Cash, Forcing Much of Economy Into Barter (November 10), India’s Cash Crackdown: Chaos Continues (November 16), and India’s Cash Crisis May Take Months, Not Weeks To Resolve (November 18). I include the links for interested readers but it’s not necessary to read these three previous posts to follow the discussion here.

How has the Indian policy been a debacle? Let me count just some of the ways. It has failed to crack down on “black money”– its announced goal, as discussed further below. Demonetization has been poorly implemented: the Reserve Bank of India– India’s central bank– has failed to supply sufficient currency, in usable denominations, to support ordinary economic activity, and has further confused matters by issuing frequent, ad hoc, contradictory circulars on policy detail. The inability to secure cash has affected just about everyone– whether a national or visitor– who has been in India since demonetization was announced. Consequences have ranged from mere inconvenience, to failure to be able to conduct ordinary business or economic activity, to in the most extreme cases, suffering and on one estimate, as many as 112 deaths.

The Patient Has Diabetes, So Let’s Treat Him With Chemo And See How That Works Out: … //

… Reality Does Not Resemble a Bollywood Movie: … //
… Inept Implementation: Printing Logistics: … //
… Inept Implementation: Inopportune Timing: … //
… Change Chicken and Growth Slowdown: … //
… Inadequate Infrastructure, Lack of Privacy and Other Safeguards: … //

… Bottom Line:

Demonetization in India has been a debacle, and there is no end to the problems that it has created currently in sight. The best that can be said about it is that it might deter political leaders in other countries think long and hard before initiating similarly ill-conceived, premature efforts to try and nudge transactions away from cash and toward cashless payment systems.

(full long text, hyper-links).


Fireworks Sydney Australia, Happy new year 2017, 1.23 min, uploaded by Viral Video, Dec 31, 2016;

Dubai – Burj Khalifa Fireworks: downtown Dubai 2017 New Year’s Fireworks, 8.56 min, uploaded by Talk Shows Central, DEC 31, 2016;

our web-statistics for the year 2016, on Gesundheit, Santé, Health, Dec 31, 2016;

Obama’s Economy Pushed Many Women, Men, Into Part-Time Work – report, on Breitbart, by CHRISS W. STREET, Dec 30, 2016: the number of women in part-time jobs has doubled in the eight years of President Barack Obama’s tenure, because his management of the economy has produced very few new full-time jobs, according to a new report by left-wing academics;

Govindacharya makes pitch for an alternative economic model, on The new Indian Express, Dec 30, 2016;
PadmaShri Shri Bannanje Govindacharya;

The Information War on Syria and Beyond, on Dissident Voice, by Rick Sterling, Dec 30, 2016: the U.S. establishment is not happy. They are not content with largely dominating media narratives on Syria and other critical foreign policy issues; they want total dominance …;

Turkey-EU: Customs Union process to be finalized in 2018 – minister says, on Daily Sabah, Dec 28, 2016: as both Turkey and the EU aim to update the Customs Union agreement to expand its scope, Turkey is working on four alternatives, particularly featuring a full update to include agriculture, services and public procurement;

Gregor Gysi …, 14.50 min, von Nachrichten Deutschland am 27. Dez 2016 …;

The Ghost Ship is Our Triangle Fire, on red wedge, by Alexander Billet and Adam Turl, Dec 12, 2016;

… and this:

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