2016 India scraped 500 and 1,000 rupee bank notes overnight, wiping out over 80+ % of its cash reserves.
What followed was a humanitarian catastrophe among the unbanked classes.
Even if they ban cryptos, this would be nothing compared to that criminal political act.
Modi got re-elected. Go figure
I do not follow politics in India or any of the past events.
What happened exactly after they scraped those paper money?
What keeps transactions in any society going is liquidity in the money-markets. Given that most people are stuck with banned currency, they are telling anyone they owe money to that they will only make payment in form of the banned notes, which now trade at a discount.
This massive moral dilemma has come to appear because people found themselves stranded with banned notes overnight, and want to avoid the 20% hit in value that they will have to take by converting them through the mafia.
Imagine someone who has collected ten million rupees in cash, facing the ban a day before he had to return the money to someone he borrowed from. What is he likely to do? Force his creditor to accept these banned notes, or bear the loss of 20%, which he might not have the capacity to absorb?
Spouses are fighting, as they have suddenly become aware that their significant other has been hiding cash for a rainy day. Poor people are almost invariably getting paid in banned notes, which requires them to line up in queues the next day to convert what they received, wasting at least 50% of their productivity – assuming they have a job.
There are moral dilemmas galore. But this had to happen in a society run by rulers who have absolutely no sense of morals, reason, not to mention respect for private property.
Money deposited in the banks is mostly frozen, something that people are not yet paying much attention to, for all their focus is on getting rid of the banned cash. The problem of frozen bank accounts will surface once the current conversion stops by the end of this year. That is when the salaried middle class, which mostly supports Modi, will finally wake up.
It is also clear that Modi has to take more and more increasingly repressive steps to keep people from taking protective measures. As noted above, India will rapidly become a police state.
The worst sufferers are poor people, whose ownership of currency was neither unaccounted for nor corrupt. Not being street-smart and not understanding how banks work, as they are often bullied by standoffish bank officers, they are stuck with the old currency, clueless as to what to do.
They are the silent 25% to 50% of the India population. They cannot even participate in the money-converting mafia, because they don’t understand many of the things that look quite simple to members of the middle class.
Should a single person have so much power to be able to destroy the lives of almost one out of every five human beings on the planet?https://www.zerohedge.com/news/2016-11-25/when-money-dies-indias-demonetization-massive-man-made-disasterLook at the nice pictures