India currency crisis.

[ZenOps]

http://timesofindia.indiatimes.com/india/Air-tickets-bought-using-old-Rs-500-and-Rs-1000-notes-to-be-non-refundable/articleshow/55353605.cms

http://timesofindia.indiatimes.com/india/I-T-raids-on-jewellers-hawala-operators-accepting-banned-Rs-500-1000-notes-at-40-discount/articleshow/55355807.cms

India bans 500 and 1000 Rupee notes for most purchases, but they are still worth 40% of their face value if the other party will accept them. For a short period of time, they must legally accept the currency for things like plane tickets (which are selling fast)

Which is right on par with what the peso should be, about half value after factoring in Trump.

[Escape]

This is only half the news. You can deposit current 500 and 1000 notes in your bank without limit and new 500 and 2000 notes are coming.

[rage2]

You're reading it wrong.

Think of the bills as our $20 and $50 bills. The government is trying to kill off what they call black money, people that deal strictly in cash to bypass taxes. Bribes, drug dealers, etc. the government made the bills non legal tender immediately. You can deposit the bills into banks until the end of the year which fucks over large undeclared cash. The people taking in the cash at 40% value is literally a 60% laundering fee.

The criticism here is that many Indians, particularly the poor, don't have bank accounts so it unfairly fucks them over too. Canada did something similar with the $1000 bill years ago.

[ZenOps]

http://www.bbc.com/news/world-asia-india-37933233

"The two notes accounted for about 85% of the cash in circulation"

1.29 Billion people use notes, a gigantic upheaval.

Shoulda saved the nickels... Arguably, this type of announcement everyone knew was coming, but to trigger it on Trump day lets them possibly shift some blame.

Technically, Canada could do the same to ban the $100 bill if they determine too many people are doing under table deals. Yup, they killed off the $1,000 bill a while ago, I believe when a bank gets one its immediately slated for shredding.

[ZenOps]

Its kind of silly really. If they are just going to print new notes why bother bringing in the old ones?

Currency can change hands on 80,000 different deals. The only reason people stop using it is usually because the physical note has deteriorated. To say that 85% of the currency in circulation is used in black market dealings might be right for 41,000 of those 80,000 transactions but the guy who legitimately got the money is still getting screwed.

It not just the poor, many people around the world want to have nothing to do with the banking system.

There is also the small but not impossible thought that they will not be printing bills to replace the legally worthless money, or worse yet - printing 10x more new bills than old. Crazy, but possible.

http://www.bbc.com/news/world-asia-india-37947449

For those who have only saved in bills (does happen) I can imagine that the government knows this and the imposed daily limits and day long lineups will force them into the banking system or lose their life savings.

[rage2]

Originally posted by ZenOps
Its kind of silly really. If they are just going to print new notes why bother bringing in the old ones?
I thought I explained it quite clear? If you don't bring in the old ones, they're worthless after 1/1/2017. If you have undeclared money, bringing it in leaves a paper trail, where you can be subject to taxes, fines, etc. It's a pretty simple concept.

In other news... anyone going to India before the new years? :rofl:

http://i.imgur.com/Qul94bZ.jpg

[RealJimmyJames]

bbbbbbaaaaallllleeeeerrrrr!!!!
http://static.vibe.com/files/article_images/article-2257209-16C051F1000005DC-920_634x822-compressed.jpeg

[ZenOps]

Canadian perspective:

http://globalnews.ca/news/3060319/chaos-in-india-after-pm-voids-86-of-currency-notes-to-tackle-underground-economy/

"As of now, only about 1.6 per cent of India’s 1.25 billion people pay income tax."


Great holy Jeebus, I had no idea it was that bad... Damn, they should be banning the nickels too.

[rage2]

While that 1.6% number is low, you have to realize that there is a huge wage gap in India that's responsible for such a skewed statistic. You simply can't compare figures to ours. 25% of the population is below the poverty line. Over 90% of the population are deemed low income earners (equivalent of someone in Canada making say $10k a year). These people purely work cash jobs to earn a living. Those 1.6% tax payers are pretty much all working at international companies where they have to follow the rules. Don't feel too bad for them, their average salaries are easily 30-50x the national average salary.

[revelations]

India is still highly restrictive with digital currencies like BTC - but this will undoubtedly change with time.

Even in Canada, banks (ATB in my case) is starting to charge for large cash deposits. I can see something similar here in a few years where the 100$ bill is axed.

[BigMass]

currency in Canada is never "axed". They will discontinue it, but originals will always be accepted for deposit at banks. You can deposit $1000 bills at the bank no problem. I have some old $100s sitting around form bygone kijiji sales and they will always be accepted in deposit.

[Jlude]

Originally posted by rage2

I thought I explained it quite clear? If you don't bring in the old ones, they're worthless after 1/1/2017. If you have undeclared money, bringing it in leaves a paper trail, where you can be subject to taxes, fines, etc. It's a pretty simple concept.

In other news... anyone going to India before the new years? :rofl:

http://i.imgur.com/Qul94bZ.jpg

You know I am :rofl: Mail them to me and I'll mail you back good ones when I get back. I have a bunch of 500 and 1000Rs notes from my last trip.


The problem is, they did this and also shut down banks for 2 days after they did this (in the middle of the night btw), which as you said, usually makes things difficult for the poor for the reasons you outlined, but those who do have bank accounts, if they don't use debit/credit (which a lot don't), they can't get any money. Even after the banks/atms were working again, the lineups were huge for a day or so.

Black money is a huge issue in India, Pakistan sends tons (literally) of counterfeit money into India, just to fuck with them.

[ZenOps]

This is a great way to study currency instability scenarios and what becomes valuable.

Sure, you got a 40% value for jewelry (gold) but seemingly stranger to me is that table salt is going at 10x value (10%)

I highly doubt this will ever be the scenario in North America because of our vast quantities of salt, but it just goes to prove that when things go bad - people do tend to flock to very specific items.

[cashflow]

I thin you guys are not understanding the overall scenario also. As soon as PM Narendra Modi came into power (2 years before) he introduced a scheme to open bank account for poor people. He asked every citizen to get an account. Guess he was preparing for big tasks such as this. Also railways, groceries shoppers have 3 days extended limit to accept the bills with refunds not exceeding a maximum of 10,000 rupees. Also all the criminals and terrorists organizations such as Maoists (communists) and Islamic radicals use black and fake currency. Those crooks find themselves out of sorts now. And all the artificial land/property price increases would get killed because of this move. Its a bit of inconvenience for people but most population is very thankful and supporting the PM. We stand in long line ups for movie tickets, concerts and auditions ... this is nothing. Also I suggest you guys read this real time testimonies from people ...

https://www.reddit.com/r/india/comments/5c195e/do_you_guys_know_any_people_hoarding_lots_of/

[ZenOps]

Its all a matter of perspective.

Criminality changes based on what the laws are at the time. Alcohol used to be illegal in the US. Tobacco cigarettes have been illegal at varying times in different countries as has marijuana.

Some say criminality and cash is a necessary part of a free market capitalist system with little to no intervention from a government. The United states during its growth period most definitely had cash and illegality in the wild west days. Some would say it was the period of greatest growth in the US (if somewhat lawless, there is no doubt a lot of stuff got done)

By my own estimation: Honesty is not really a "growth" vector for an economy. Hard work is, technology advancement is, prudent planning is, but not really honesty. If Galen Weston honestly sold you a loaf of bread at only 3% markup, there is no way he would be worth $10 Billion today.

BTW: Ask many US citizens what they think of US banks, and they may just say that it is a criminal organization in itself. Especially those who have been on the losing side of a transaction.

[ZenOps]

FLsQVLmyoso


Damn, you'd think they were giving away free tickets to the Superbowl.

[sputnik]

Originally posted by rage2
You're reading it wrong.

Think of the bills as our $20 and $50 bills. The government is trying to kill off what they call black money, people that deal strictly in cash to bypass taxes. Bribes, drug dealers, etc. the government made the bills non legal tender immediately. You can deposit the bills into banks until the end of the year which fucks over large undeclared cash. The people taking in the cash at 40% value is literally a 60% laundering fee.

The criticism here is that many Indians, particularly the poor, don't have bank accounts so it unfairly fucks them over too. Canada did something similar with the $1000 bill years ago.

The poor are still more than welcome to trade in their 500/1000 rupee notes for other bills.

So it doesn't really affect them other than the PITA factor.

[ZenOps]

Originally posted by sputnik


The poor are still more than welcome to trade in their 500/1000 rupee notes for other bills.

So it doesn't really affect them other than the PITA factor.

$60 per day. And assuming the bank has enough smaller notes for everyone, which they don't. It would be like getting rid of the US $100 bill, it would be a logistical nightmare considering there really aren't enough smaller denominations to fill the gap.

Assuming you were saving $10,000 for a vehicle in India in cash (not out of the norm) and you could only convert $60 per day by waiting in line for six hours. The anger is real, very unusual for India the land of Ghandi.

With an ATM the size of a small refridgerator and 1.25 billion people looking to exchange maybe $300 worth, well - lets just say you need a heck of a lot of refridgerators and be stocking them every hour (seems to be 202,000 ATMs in India by estimate count) ATMs only of course working for those who have electronic banking setup.

Also: Those who are getting the smaller denomination notes are hoarding them, and using them sparingly - exacerbating the problem.

http://indianexpress.com/article/india/india-news-india/demonetisation-suicides-heart-attacks-and-even-a-murder-among-33-deaths-since-decision-4378135/

[HiTempguy1]

Originally posted by sputnik

So it doesn't really affect them other than the PITA factor.

Cause they all have days off to go to the bank? Or have transportation to get there? Only two examples of a list of them.

Did you think that statement through? Its not like Canada, I bet it would be pretty tough for a large majority of the poor to get to a bank. They have this thing called "surviving" to do.

[ZenOps]

China banks now not accepting old Rupee bills.

http://www.hindustantimes.com/world-news/indian-banks-in-china-not-to-accept-scrapped-bank-notes/story-LSIqHUpJenmroqzdUMqXOL.html

Not surprising, western forex banks pretty much stopped accepting them the second the announcement was made.

http://www.cbc.ca/news/canada/toronto/indian-rupee-canada-worthless-cash-1.3846942

Canada in essence did the opposite, we demonetized the real money (pennies and nickel content of coinage) and replaced it with iron.

After thinking about it for a while. It *would* be possible for the USA to make the $1 $5 and $10 bill illegal. They however could not get away with making the $100 bill illegal. So the exact opposite of India - Assuming at some point in the future the US will make cash illegal.

After which I assume the US would try to get people to use Pokecoins or SuperMario coins as money.