India voids largest banknotes, causing panic and confusion
Weiss
Posts: 9,939 ✭✭✭✭✭
In a surprise move, India announces the largest denomination Rupee notes will soon expire, then mandates their deposit in banks, and limits cash withdrawals.
For those who still don't get why PMs should play a role in your safety net, no matter how little you can afford to invest and hold...
We are like children who look at print and see a serpent in the last letter but one, and a sword in the last.
--Severian the Lame
--Severian the Lame
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Comments
Hmmm...fifty-odd days to soak up all bills with a conversion value of $7.55 and $15.10? Considering something like 45% of transactions use these bill that is a tall order indeed.
In honor of the memory of Cpl. Michael E. Thompson
I wonder what spurred this.... I certainly have not been aware of issues in India... Cheers, RickO
They claim it's because of the black market and people avoiding taxes. I heard not too long ago that only a tiny percentage of Indians actually pay taxes. The rest essentially ignore them.
Governments have recalled, devalued, hyper-inflated paper money for centuries. Nothing the average person can do about it.
--Severian the Lame
Will have a new 2000 note though. If that wasn't the case I'd think more of this.
Well...they say they're going to. But they're going to limit transactions.
--Severian the Lame
Temporarily limit transactions so it's not cash in->all of it right back out. I don't necessarily think that's bad as there might not be enough currency in other forms to handle that transaction 1-1.
The average person can buy gold and silver to preserve their wealth no matter how modest it may be.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
@PerryHall... Isn't that why the Indian Government tried to restrict access to gold by the people? Cheers, RickO
Yes but isn't there a thriving black market over there? Also, you can always but jewelry.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Yes... I have heard that although the government has assigned severe penalties, the black market is indeed thriving. Cheers, RickO
As Weiss said, it is because of the lack of tax paying and black market.
My wife works with a number of Indians and this was a topic of conversation with them yesterday.
The ones with legit jobs and legitimately paying taxes, use banks, and this won't really impact them (unless, for that small %, they are the wives/husbands hiding money from their spouse this way).
The Indians that have their own little businesses often use cash and don't pay taxes. This is meant to stop that and to get the taxes.
They need the have people paying taxes as their infrastructure and support sucks
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
No, I meant there is nothing the average person can do about paper manipulation. The whole reason I posted this was, as I said in the first post, to encourage people to buy PMs no matter their situation so that they aren't at the mercy of paper currency and its inevitable failing.
--Severian the Lame
I travel through a lot countries, India makes the most fuss about their currency. In India I must declare that I'm not taking any of their precious rupees out of country. I also have to declare what other currencies I bring in and how much. Other countries, not so much 'cept for China.
The war on cash continues...
Crazy story. Makes me want to go buy some silver.
Yet they add a new R2000
Nationalize safe making and selling
Then only allow 1's
Agree, tax evasion and criminal activity are not something new, but make good excuses for taking away one's right to be independent of a financial system by stashing cash. Money is like gold in that it is best to not let someone else have possession of what is yours.
Martin Armstrong on eliminating cash
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
I wonder if this is having any effect on the gold market.
Toilet paper now comes in 8 ply
HE>I
gold climbed to $2294US an ounce in India. Currency crisis insurance protection at work.
"but our currency is different." only for the moment.
India cash ban, Part I
Part II
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
"Experts" are saying it will hurt long-term gold holding and buying in India. Gold represents a parking lot for black market money. They're doing everything they can to make that untaxed money go away:
https://www.ft.com/content/b6e4e7a6-a804-11e6-8b69-02899e8bd9d1
--Severian the Lame
The paywall is stopping me from reading, care to paste the text of the article here for us to read?
I disagree with the "experts". If cash is being taken away as a "black market parking lot" then gold becomes a more desirable option for those looking for that avenue. Now, there is one less option to turn to in India and the rupee has failed people who have hoarded it, so confidence in fiat in India will be even less than before (if that is possible).
You might have to search on the word "gold" on the FT link I provided.
--Severian the Lame
I keep this in my wallet as a reminder that the only value "money"
has is the value set by the person receiving it, not the person holding it.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Definately something for stacker to think about.
Knowledge is the enemy of fear
I find it interesting (or ???) that this obscenity on the people's currency is starting in a country where PEACEFUL protest is the accepted form.
He already thought about it. That's why he stacks.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Then he needs to think a little more. Remember, when TSHTF, you are going to be asking someone to take that little chunk of silver off your hands for something they have and you want. Therefore, they will be deciding the value of that chunk of silver....and I am quite confident that their value will be dramatically lower than your value.
Knowledge is the enemy of fear
My B&M recently got a really nice selection of foreign banknote currency pieces in. Big collection--a couple thousand pieces. Early 20th century to about 1990. Beautiful colors, great designs. Some really historical. Large denominations, mostly. So many shapes and sizes. So many letters and symbols and languages. Some with gorgeous intaglio printing on heavy stock paper, with watermarks and seals and serial numbers. Really nice to look through.
The one thing they all have in common? They're all worthless. He's selling them for fifty cents each.
--Severian the Lame
Well, let's think about that Weiss. That 200 billion mark note in 1923 would have bought a loaf (or several) of bread. Today that note still fetches 50c, or not much less than a loaf of bread today...it's a buck all day long at Wally World.
Seems that note has indeed maintained it's purchasing power
Knowledge is the enemy of fear
Gotta disagree, cohodk. While it's true that certain hyperinflation bills from certain countries and certain times may have minor collector interest (believe me, I love them!), the majority of the pieces my dealer has were just workhorse notes whose governments and/or economies had come to a violent end. Many within the last 10 or 20 years.
And sure, you might have gotten paid 250,000,000 marks on a Tuesday night in 1922 and waited in line at 4:00 am when the bakery opened so you could buy a loaf of bread before the price tripled at noon. But your life's savings (let's call it 100,000 marks--roughly $25,000 at the time) was worthless. Everything you'd spent your whole life working for, everything you'd done without for years or decades was literally not worth the paper it was printed on. Nearly 100 years later your 100,000 fortune might bring a buck or two at the coin shop.
But if you'd saved that money in the form of the workhorse silver coin of the same era--the widely circulated 1 or 3 mark pieces--the melt value today alone would be worth more than $250,000. To say nothing of the collector value.
--Severian the Lame
Weiss nailed it. People whose savings were in Marks were whipped out after a few years of hyper-inflation. Those who hoarded gold and silver preserved their wealth.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
sounds like a good insurance policy if nothing else.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
It's the most common straw man argument used on this forum, that gold and silver are more likely to "preserve wealth" than holding and storing paper money for long periods of time, especially paper money that's NOT the world's reserve currency and issued by the most powerful country on the planet. The choir continues to be preached to; no one here is advocating keeping significant amount of net worth in the form of federal reserve notes, much less any other country's bills.
What if that German fellow had his money in stock of Merck company? A house in Frankfurt or Munich? 15th and 16th century paintings or swords or books? In addition to his gold and silver and uncut diamonds, of course
Liberty: Parent of Science & Industry
Not a straw man at all. The OP (which was incidentally mine) was about a modern government intentionally devaluing its own currency. That is what happened in Weimar Germany.
What is a straw man is implying that PM fans advocate having all of one's wealth in gold or silver. I doubt any of us do that.
But I'll take the bait
What if that German fellow had invested his money in any of the largest Germany companies? The German government had nationalized 500 of the largest German companies by the early 1940s. Poof, there goes your life's savings.
And what if that German gentleman was a Jew? What became of his house in Frankfurt or Munich? What became of his 15th and 16th century paintings or swords or books? Did he take a house with him when he fled? Did he move books or swords with him to the ghettos? Those paintings, of course, fell into the custodial protection of the Kunstshutz.
Diamonds. Perhaps. I bet you could get $.20 on the dollar selling "investment" grade/size/quality diamonds back today to the person from whom they were purchased yesterday (on your minimum investment of $10,000 or $20,000). Incidentally, I understand that last year a laboratory created a flawless 10+ carat genuine diamond gem from a 30+ carat rough stone.
Look: PMs aren't perfect by any stretch. But they provide some pretty amazing attributes even in the 21st century that few other investments/stores of wealth can offer: Concentrated, untraceable, portable, liquid, resilient, desirability that can't be damaged, created, or devalued arbitrarily. Your minimum investment is a few dollars, and there's a reasonable chance you can actually sell them back at a profit today to the guy you bought them from yesterday.
--Severian the Lame
Look: PMs aren't perfect by any stretch. But they provide some pretty amazing attributes even in the 21st century that few other investments/stores of wealth can offer: Concentrated, untraceable, portable, liquid, resilient, desirability that can't be damaged, created, or devalued arbitrarily. Your minimum investment is a few dollars, and there's a reasonable chance you can actually sell them back at a profit today to the guy you bought them from yesterday.
No doubt about any of it, and very well said. Amen, fellow stackers. Let us prey
Liberty: Parent of Science & Industry
Sounds like they are a reasonable alternative (threat?) to fiat currency. Only natural for makers of fiat currency to fight back.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
You didn't infer somebody making you look bad in you predictions so no, you didn't rely on a conspiracy to explain what you don't know.
I knew you had it in ya.
Knowledge is the enemy of fear
The 1000 and 500 Rupee notes are no longer valid currency in India. All you can do with them is deposit them into a bank account. This is simply a war on cash. The Indian government calls it "Black money" and says that withdrawing it will help erase corruption and eliminate the black market. It is scary that with a decree and a widespread propaganda message, they are eliminating a tax-free payment system. Now Indians have to use cashless transactions with the percentage of the transaction going to the banks. Shows you where the real power is coming from.
Next, the rumor is that they will close the gold import/export window. The only way gold will be able to enter the country is through....you guessed it...the banks. If this becomes reality, watch gold tumble outside India and soar inside. Again, the banks will be the only ones who can make the profit on the arbitrage.
Keep a close eye on what they are doing. What would happen here if they withdrew the $50 and $100 notes. The Federal Government may do that as a way to kill the pot industry (as an example), since they are all cash right now.
I get what your saying Weiss, and that wasn't my point, which was simply that that old obsolete piece of paper was still valued at about the same as a loaf of bread.
As far as PMS beING a store of wealth, of course they are, as is any asset. And I've shown repeathedly that as all asset classes will perform similarly over a long period of time, such as ones lifetime. The only difference is like night and day, as the sun shines more on one class over another at different points of one's lifetime.
PMs do however lack a very critical component-dividends/income- which take advantage of compounding, which is arguably the most important aspect of any investment. If only that 100 oz of silver would give me an additional 3 oz every year, then we'd be talkin.
Knowledge is the enemy of fear
compound interest? lol.
If only that $100 in savings would give me an additional $3 every year, then we'd be talkin.
Physical PMs are strictly term insurance to cover catastrophic monetary events . You want whole life insurance protection that provides income? Buy stock in a solid miner.
And now we have Venezuela showing the need for such insurance.!
And now we have Venezuela showing the need for such insurance. But it can't happen here? It has been happening for decades, just in slow enough motion so that those with their heads in the sand don't notice. In this regard our central bank is smarter than most.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Europe proposes a tax on ATM withdrawals
Ah, the value of an electronic monetary system. lol.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Derryb recommends stocks!!! Miracles can happen.
I'm glad you see the power of compounding and realize PMs do not offer it
Knowledge is the enemy of fear
"The 1000 and 500 Rupee notes are no longer valid currency in India. All you can do with them is deposit them into a bank account. This is simply a war on cash. The Indian government calls it "Black money" and says that withdrawing it will help erase corruption and eliminate the black market. It is scary that with a decree and a widespread propaganda message, ..........."
Well. Denominations above $100 were withdrawn in the US decades ago. Impact on our financial system or stability. None.
"The vaccines work,” Trump said, adding that the people who “get very sick and go to the hospital” are unvaccinated.
“Look, the results of the vaccine are very good, and if you do get it, it’s a very minor form,” Trump continued. “People aren’t dying when they take the vaccine.”
Do your part, America 💉😷
And I've shown repeathedly that as all asset classes will perform similarly over a long period of time, such as ones lifetime. The only difference is like night and day, as the sun shines more on one class over another at different points of one's lifetime.
Maybe so. But within any given asset class, some specific assets will outperform other assets. A house in a nice and growing beach or college town will outperform a house in a crime ridden, decaying city. A stock of a company that is growing profits will increase in value faster than a company that is suffering year after year losses in a shrinking sector.
precious metal bullion fluctuates up and down with the values of currencies, inflation, news flow, supply and demand, etc.
Liberty: Parent of Science & Industry
From wikipedia:
*Although they are still technically legal tender in the United States, high-denomination bills were last printed on December 27, 1945, and officially discontinued on July 14, 1969, by the Federal Reserve System, supposedly due to 'lack of use'. The $5,000 and $10,000 effectively disappeared well before then.
The Federal Reserve began taking high-denomination currency out of circulation (destroying large bills received by banks) in 1969. As of May 30, 2009, only 336 $10,000 bills were known to exist; 342 remaining $5,000 bills; and 165,372 remaining $1,000 bills. Due to their rarity, collectors often pay considerably more than the face value of the bills to acquire them. Some are in museums in other parts of the world.*
There was no impact in removing $500 + denominations because there was no forced removal of the bills. The Indian notes are valued at roughly $7.25 and $14.50 in exchange rate to the US dollar. The closest approximation of the impact would be if we demonetized the $10 and $20 notes.
There is a difference between the demonetization of bills - making their use illegal. and withdrawing currency that is not typically used. Also, the time period the Government gave the Indian people is extremely short.
-500?
-1000?
Use 100s
It does not seem complicated
. . . While Venezula introduces bigger and bigger notes
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Horrifying. Imagine that happening here. Your $50,000 or $100,000 401K is suddenly worth just enough for a month's worth of groceries.
--Severian the Lame