The War on Cash Rages On in India and Venezuela
Imagine you roll out of bed tomorrow to find out that US $100 and $50 bills were outlawed and deemed worthless? Hard as it is to believe, this is now taking place in both Venezuela and India.
It’s a war on cash. And it’s coming soon to your doorstep.
This past Sunday, President Maduro, the tyrannical leader of the socialist paradise of Venezuela gave a three day warning that he was eliminating his country’s 100 bolivar bank note.
The official reasoning for the removal of these bills according to President Maduro’s statement on Venezuelan state-run TV:
“There has been a scam and smuggling of the one hundred bills on the border with Colombia, we have tried the diplomatic way to deal with this problem with Colombia’s government; there are huge mafias.”
The 100 bolivar note was the country’s largest currency denomination left in circulation and was equivalent in value to $0.02 USD.
That’s down dramatically from $0.10 when I visited Venezuela in March and needed a backpack of money to buy dinner.
It’s hard to imagine that things can get much worse for the poor people of dystopian Venezuela who in many cases have had to resort to killing feral street animals in order to survive. Yes you read that correctly: Some have had to kill and cook dogs, cats and pigeons because of the limited food supply.
What is going on in Caracas, Venezuela is a modern example of the horrors of hyperinflation and the toll it can take on an unsuspecting population.
According to the IMF’s most recent estimation of the country’s inflation, the rate currently sits around 2000% and continues to grow daily – so fast in fact that restaurant owners have to update the prices on their menus almost daily.
Because of the sheer volume of banknotes which are required for daily purchases, many business owners and shopkeepers no longer determine prices based on the numerical value of the currency they receive. Instead they’ve started using scales to weigh the paper money which people carry around in backpacks instead of wallets.
Meanwhile, the currency situation in India is verging on the hardship in Venezuela. India has now banned 500 and 1000 rupee notes, though the government has also assured the public it would print a 2000 rupee note to replace the smaller denominations. Unfortunately, that has yet to happen and – given India’s track-record – may not happen. Meanwhile, as a result of the currency chaos, poorer people are literally starving.
When it comes to currency, Venezuela is copying India by announcing that it too will issue six higher denomination notes. Thus, both of these countries have eliminated high denomination currency notes under the guise of “fighting crime” and both have promised higher valued notes in the future to fix the problems caused by the elimination of their current high valued bills.
The trouble here is that removing bills doesn’t fight crime. At least one recent study shows countries with the largest currency denominations actually have the lowest crime rates. Take for instance a country like Japan which is praised for its low crime rates and has a 10,000 yen note worth around $85 as of today.
Switzerland is a prime example of the opposite end of the spectrum because not only does it have a 1,000 Swiss franc note worth roughly $1,000 USD and one of the lowest crime rates in the world, but unlike Venezuela where guns are outlawed and violence is rampant, 1 in 2 Swiss people are gun owners.
It’s not difficult to see the correlation when you look closely at the situations in Venezuela and India – and it’s no coincidence that India also happens to have some of the strictest gun laws in the world.
Unfortunately, the reality is that we are living in an increasingly Orwellian world where nearly everything your average person thinks and believes is false.
Exactly how the financial elites want to keep it – so they can can keep plundering the masses. Don’t let them ransack your savings. Learn how to keep your money outside their game which is the monetary system and fiat paper.
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It’s my opinion that what is happening in Venezuela and India are being used as test cases before rolling out fiat currency cancellations throughout the Western world.
Don’t be like most of the folks in India and Venezuela who waited until the ATMs were shut down and their cash declared worthless before taking action.
Berwick has been waging a war on his clients' cash: https://liberty.me/discuss/t/jeff-berwick-and-tdv-immigration/
Hi,
This statement is incorrect and somewhat misleading. The ground level situation is different. Rs.2000 notes have been produced and supplied in many cities including mine (I live in a smaller tier-2 city) from the time this policy came into place. Withdrawing cash from atms isn't hard at all. But there is a daily limit imposed on ATM withdrawals and weekly limits on cash withdrawals from the bank. Which I hope will be lifted soon.
Production of the new Rs. 500 note has been ramped up and the short supply should fade away in the next few weeks. There is a cash crunch in ATMs in the metro cities but things have improved a lot and as with any major change, there will be some chaos initially. This was also due to the fact that new notes are of a smaller size and every ATM needs manual re-calibration to accept new notes-delaying the supply and redistribution aspects of it.
The implementation has not been in-line with public expectation unfortunately and the supply could have been ramped up to build a bigger buffer prior to the announcement but to say the government is off-track would be going too far!
There are pros and cons to such a move. Given the population of my country it will take some time for things to settle down. Because, India has always had a HUGE parallel cash economy or black economy.
Cash crunch resulting in demonetisation has certainly helped fight crime, especially reduce instances of rioting which in the past was funded largely by those in power hoarding vast sums of unaccounted Black money to be spent at their whim and fancy.
Although there are ways to get around this cash crunch for some people and ways to convert black money into white etc. It's not a major issue right now. Personally I think the implementation needed to be better and daily wage labourers, business that run on cash and many amongst the poorer classes would suffer or have suffered from lack of availability of larger denominations and those without access or knowledge of modern banking, especially in some rural areas.
But the government is ramping up efforts and so are the bankers to reach out to the rural areas and improve banking there. Things are improving at a good pace and in urban areas you won't need cash to get about your daily needs if you have a debit or credit card-which we all do, multiple cards and bank accounts are quite common!
I came back to India on the 1st of December, and it was only yesterday I needed cash to pay a local business owner who only accepted cash. I've withdrawn a total of 4000 Rupees from an ATM which is roughly 59 USD in the last 16 days I've been home.
I was on holiday in India during the demonetization announcement. I think you are espousing the typical middle class Indian's thoughts on this. Frankly, they're the most insular, unsympathetic people I have ever met(many of which are my family members). If as you say, there isn't much of a problem why are there still queues at the banks? Why have people changed their spending habits? And have you actually tried spending a 2000rs note? According to people I know there and from what I saw when I was there, many vendors still won't accept it! Outside malls and hotels, it is almost impossible to spend on card - that will obviously change but in the short term the problems with a cashless society arise.
As for corruption and crime, they have gone up since the announcement! To get large amounts of money deposited into banks, backhanders have been placed. In short, I think this move will turn out to be a disaster and you've got your head in the sand, think of the average man in this scenario.
I wrote about my experiences and the potential problems here:
https://steemit.com/bitcoin/@drkarl/in-the-midst-of-indian-demonetization
A resteem of the article would be nice @dollarvigilante :)
Please accept mine too! Cheers!
That sounds overly harsh on you personally @firepower. It was never intended to be that way, accept my apologies.
Gentlemen, I've just had the pleasure of enjoying a fair and rational discussion (thanks to both of you) regarding a situation which I have followed for the last month and a half. A situation from which I am far displaced and wholly reliant on anecdotal reports and sensationalized click bait targeted at financial geeks like myself.
Polite, erudite, and revealing, I feel privileged to be a witness to your exchange.
My sincere thanks going out to each of you.
Respect.
Much appreciated (and likely needed) perspective from someone actually living in the area. Given the scale of India's population I'm sure the stories of this new financial paradigm vary quite widely...
Enjoyed dinner with you the last night of Steemfest, glad the economic situation is relatively stable for you at home.
Take care brother.
All good here. Life goes on no matter what in this country or pretty much everywhere I take it. It was great hanging out with you. Hopefully soon in the US of A my friend! :)
Looking forward to it! 🙂
And there's talk of the Australian government banning the $100 and $50 too. Like criminals don't know about $20 notes!
Then the Currency Act in AU will change to limit the maximum amount of cash you can pay in a single transaction - first AUD1,000 then AUD500, etc, etc
You already have to account for any cash payment over $10,000. Crazy! I bought a car last year and was turned away with cash in hand, forced to come back with a bank cheque!
Very informative and agree wholeheartedly with this post... It's crazy to see what banks are doing and proper media coverage is nowhere to be found.
All this nonsense will just push more people into cryptocurrencies. Better for us, but sucks that so many people will be harmed in the process...
Venezuela is a total chaos right now. Today bus drivers have stopped accepting Bs. 100 bills to pay the fare (yeah, we pay the bus fare with our largest currency denomination). There's little circulation of Bs. 50 and Bs. 20 bills, let alone for Bs. 10, Bs. 5 and Bs. 2 bills.