War on Cash Backfires on India’s Economy

By Clint Siegner

Indian Prime Minister Narendra Modi launched a surprise attack on cash in late 2016. He gave Indians a few days to convert the two largest denomination bills then circulating to bank deposits, after which point any undeposited notes would become worthless. The move was intensely controversial. Transactions completed using cash represented the vast majority of economic activity in the country.

In order to sell the program Modi employed a familiar strategy. He vilified the users of cash as tax cheats and criminals. He promised the measure would punish black marketeers, boost the Indian economy, and increase tax revenues. The latter may be true – forcing transactions onto the grid is good for nosy bureaucrats trying to impose taxes and controls.

But it now appears Modi’s claims about the amount of criminal activity tied to cash and promises of economic growth were nonsense.

The official argument was that cash is an indispensable tool for black marketeers. The reform would catch many of these “criminals” with piles of cash they would be unwilling to declare and deposit. That argument fell apart last week when the Indian central bank reported that 99% of the outlawed bills were converted to deposits. Turns out very few “criminals” were punished.

Meanwhile the Indian economy is paying the price. Growth has slowed significantly and some estimate as many as 5 million jobs have been destroyed by the demonetization of cash. More and more Indians are angry.

They didn’t enjoy the upside promised by Modi. Instead, they suffered massive economic disruption and loss of privacy. Perhaps India’s experience will provide an object lesson elsewhere in the world where bankers and the political elite are waging a similar war on cash.

Clint Siegner is a Director at Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.


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4 Comments on "War on Cash Backfires on India’s Economy"

  1. Thank God. This is the best news I’ve heardvin a while.

  2. Like all elite weapons lately.
    On the war on terror, drugs, empathy, weather, sexes, mind, terrorism, religion, cash, etc.
    Useless backfiring shit.
    The NWO has a major problem, and it can’t be fixed.
    They can only win if they reduce the world population under one million people. Because that will be just the elite themselves, and their henchman left over.

  3. SPOILER ALERT – i am certain to be labelled as racist
    here in south africa we have a large proportion of the public who still rely entirely on cash
    the banks encourage getting an account, businesses pay wages into those accounts, and every (or every second) friday, you have queues at the ATMs.
    there are a few factors at play, but at the top – 1) the people still don’t trust the banks (possibly apartheid-related? i definitely don’t know)
    2) our education system actually makes the american model look like its working (and when people aren’t educated, they look at new strange things – like ATM cards – and say NO)
    3) conceptual and tangible – if you can’t think for yourself (see point 2) how do you come to a realisation that a concept is as real as something that you can see, hear, smell, taste or touch / feel (i.e. the tangible)
    this is why we do have fraud laws on the books, but… BIG BUT, most people don’t understand fraud, because if it wasn’t there, it can’t have been stolen
    my point – cash is here to stay, at least for the foreseeable future

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