Regardless of how this might help with "black money" (which seems to be a bit of an overhyped political bogeyman), any attempt to decrease the value or purview of cash is bad news for human rights. When all legal money is in government-controlled banks, you open up the door to all sorts of nastiness including political account freezes, government theft of funds, forced negative interest rates, etc. I personally have had my account frozen and had money taken by lien due to a paperwork mistake at the state comptroller's office. It took a few days for them to fix, and Wells Fargo charged me "legal fees" I never got back, so I have a dim view of any government action that makes the use of cash less convenient, less liquid, or less legal. In light of this news, I imagine many Indians will stop trusting Rupees as much and might just start preferring to transact in USD or something.
India's demonetisation of Rs. 500 and Rs. 1000 notes
71–80 of 336 posts
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#72Earlier quoted context omitted.
I wonder how long till the new format is duplicated?
The duplication is a minor concern the major concern is lost income tax revenue due to an underground cash economy. By restricting numbet of 500 and 2000 notes and forcing owner declare assets it put massive pressure on the black money.
The big ticket black money is in swiss accounts,real estate and gold.
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#73What about people not in India with a few 1000 rupee notes lying around, those are valueless for good? I have 2 notes. Wont the funds be effectively destroyed and removed from circulation, for those who don't put their cash in the bank by the end of next month. Wont this have deflationary consequences?
You effectively removed the money from circulation as soon as you took them out of India anyway. It won't make a lot of difference.
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#74I am not at all comfortable with the elimination of paper currency no matter what the rationale proffered by politicians and government hacks. Control of people from the top down is an ever present risk and cash money has a strong offsetting influence to the nefarious plans of would-be dictators.
Put another way: Government is not benevolent and never can be. We should all be very careful.
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#75Some programmer humour - https://twitter.com/manojlds/status/796012773373161472
good one :D
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#76You have to deposit all these notes in your bank account, from which you can get new notes. Anyone hoarding huge amount of black money in cash can't go to bank with it, and his money will turn worthless. Diluting such money will easily erode 20-40% value. So definitely a bold move.
They'll probably buy houses above market value. The seller can declare the money and pay taxes on it. The houses can be sold again one by one over the next years and the money legalized. Basically an easy way of laundering it. Still good for the state as the money is taxed.
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#77This is the boldest and probably most brilliant move by any Indian politician since liberalization of economy in 1990s. Having said that, another way of understanding this is that as of today both old 500 Rs and 1000 Rs notes have been "probabilistically devalued". For anyone in middle class and below the value essentially remains the same (other than a small devaluation due to effort required to get them exchanged),…
Call me up when our government stops doing idiotic things like sending billions in cash to Iran. Then I'll consider being concerned about income taxes.
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#78All black money and hoarders will cry to sleep today.
Or quickly buy real estate/gold/farm land above market value. The seller declares the money and pays the tax, the buyer successfully legalized it.
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#79This is the boldest and probably most brilliant move by any Indian politician since liberalization of economy in 1990s. Having said that, another way of understanding this is that as of today both old 500 Rs and 1000 Rs notes have been "probabilistically devalued". For anyone in middle class and below the value essentially remains the same (other than a small devaluation due to effort required to get them exchanged),…
Isn't this a trick that will only work once? Wont the people who are taking advantage of black money start using a different store of value that isn't controlled by the Indian government like foreign currency or high value commodities?
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#80(I'm watching the news live in New Delhi right now). The move is being pitched as an attack against 'black money' and terrorist/criminal activities and counterfeit . The idea is if you have very large sums of money stashed away in cash, you're now forced to deposit it into a bank and reveal it. If you're not comfortable doing that, you're basically going to lose your money.
There is always some rationale that involves bad actors. Then you peel back the layers of the onion and find out the government just wants to screw regular people out of whatever.