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Old 6th September 2018, 08:54   #2656
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

The really big guys were never meant to be affected. They are too important for winning elections so no government can afford to upset them.

They expected lot of average rich people like traders and small time builders, etc to get caught but an efficient exchange system materialised overnight and nobody got affected. Some people made a killing by earning that 10% or so commission for exchanging.

The poor that suffered think suffering is part of life and are very cynical about government.

That's all there is to it. Big guys were never the target. Small guys were able to take care of themselves. Poor people don't know any better.
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Old 6th September 2018, 08:57   #2657
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by extreme_torque View Post
Well the economy 101 might say that but given the size of Indian economy, I wonder if there will be any effect if we print a few billion dollars extra. Rupee is getting devalued anyway and I wonder if the devalutation compared to the extra printed will be an exact zero sum game.
Size of the economy doesn't matter. And this is hardly economics 101, but the complex world of macro economics.Money gets devalued in many ways, that are out of scope of this thread. But printing money without demand is the stupidest way of devaluing it. Also demonetization is not the same as devaluation.
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Old 6th September 2018, 09:05   #2658
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Well the economy 101 might say that but given the size of Indian economy, I wonder if there will be any effect if we print a few billion dollars extra. Rupee is getting devalued anyway and I wonder if the devalutation compared to the extra printed will be an exact zero sum game.
You can ask that question to Zimbabwe or Venezuela. Notes denominated One Hundred Trillion, a thick stack of currency required to buy even a loaf of bread etc. Printing your way out of an economic crisis is a bit of a pain, because you have to back the currency that you print. Maybe not with a gold reserve as in earlier days, but a government's sovereign guarantee goes just so far and no further.
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Old 6th September 2018, 09:12   #2659
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Size of the economy doesn't matter. And this is hardly economics 101, but the complex world of macro economics.Money gets devalued in many ways, that are out of scope of this thread. But printing money without demand is the stupidest way of devaluing it. Also demonetization is not the same as devaluation.
Why would it not matter? If the extra money is to be kept with the powers that be, the size of the economy would matter right?


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You can ask that question to Zimbabwe or Venezuela. Notes denominated One Hundred Trillion, a thick stack of currency required to buy even a loaf of bread etc. Printing your way out of an economic crisis is a bit of a pain, because you have to back the currency that you print. Maybe not with a gold reserve as in earlier days, but a government's sovereign guarantee goes just so far and no further.
Of course and anyone printing would know like the rest of the world. I am talking subtle manipulation, too difficult to catch unless you are one of the insider, small considering the size of the economy, but plenty for an individual or a group.

To someone who said there is "no corruption" here is one example
http://www.caravanmagazine.in/busine...reliance-group

Last edited by extreme_torque : 6th September 2018 at 09:14.
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Old 6th September 2018, 09:27   #2660
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Why would it not matter? If the extra money is to be kept with the powers that be, the size of the economy would matter right?
You mean the RBI mint will print the extra cash and then deliver directly to select politicians? My relative who works in RBI mint would be surprised to hear such assumptions. The protocol for money printing and transportation is extremely rigorous.
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Old 6th September 2018, 10:44   #2661
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

https://www.thehindubusinessline.com...le24822143.ece

Article from the Hindu.

In my view and experience DeMo+GST have compelled number of small & medium businesses which hitherto operated completely in the informal cash only sector to get registered. While they may file a nil return today they will be compelled to open in in a couple of years as a Nil IT return is matched with a rather large GST return and raise questions if they permanently run on a loss. GST-IT-Aadhar-Properties you own will all get linked in the near future and a persons capacity to stay beneath the radar will be more and more limited. I for one remain optimistic I twill gradually be for the better.

No one is saying DeMo was a spectacular success. In fact in my last post I say it was the PM's favourite itch and badly planned & implemented. But I cant help wonder at the severity of anti-DeMo views and sweeping statements positioned as universal truths. In fact as a relatively inexperienced social media participant I have always wondered about this trend. But to each his own.

Some posts talk of everything is back to the original level of cash only economy or thereabouts. Please could you share the data, not news opinions but data. I would love to see the data that supports this contention. Some say that those hawkers and small time vendors who started using PayTM have backed off now. Maybe some have and your personal experience says so. But PayTM company's data and growth does not seem to say the same.
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Old 6th September 2018, 10:59   #2662
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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How can you combine GST and DeMo to pass on GST's benefits to DeMo? GST has been in the works for quite sometime and combined with Aaadhar and other technology measures it will be difficult to stay outside IT radar. Such a trend is the overall policy direction and not attributed to any specific government.

This has nothing to do with DeMo which was a pure political 'master' stroke that flopped spectacularly. I am not sure DeMo was a conspiracy but it certainly was a case of "never underestimate a man who overestimates himself"
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Old 6th September 2018, 11:00   #2663
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The FM had publicly announced that he expects anywhere between 3 to 5 lakh crore will not comeback and that will be a windfall profit for the government. When you don't have knowledgeable people heading the government, at least in key areas such as finance, you will get to hear more gems like this.

Every legal currency printed by the RBI says 'I promise to pay the bearer a sum of Rs xxx ' and it is signed by the RBI governor. It means that you are legally bound to pay the holder the sum of money and it cannot be written off on one whims and fancies. Till such time as the notes are not returned, the RBI has to make provisions for the same in its books of accounts, i.e., they are legally liable to repay the amount as and when it is returned to them. So all the BS about the government making windfall gains if the money did not return, is, as usual, a truckload of BS.

The fact that just about 10,000 crores are to come back, not accounting for the currency in Nepal and Bhutan is another story. To put things in perspective the planned Shivaji statue in Mumbai is expected to cost around 4000 crores. My expectation is that at least 100 % of the currency will eventually come back, if not more, because some banks could not distinguish between real and fake notes.

RBI's own admission, inspite of the fact that it came nearly two years after demo, that 99.3 % of the currency has indeed returned, just goes on to show how much one man's ego cost this nation. Remember, only the direct cost has been accounted for, the indirect costs as in loss of lives, jobs, livelihood and businesses are not measurable.
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Old 6th September 2018, 11:14   #2664
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Samurai View Post
You mean the RBI mint will print the extra cash and then deliver directly to select politicians? My relative who works in RBI mint would be surprised to hear such assumptions. The protocol for money printing and transportation is extremely rigorous.
Actually, this is how it could happen:

There are 16 lakh crore 500 and 1000 rupee notes in circulation.

Post demonetisation, assume 14.4 lakh crore (90%) comes back.

You quickly turn the notes to hard board.

Print 16 lakh worth of new currency.

16-14.4 = 1.6 lakh crores goes into...

--edit-- RBI says 99% of the currency is back --edit--

See, no extra currency printed, no inflation. All the black money is now in party funds.

Last edited by blacksport : 6th September 2018 at 11:24.
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Old 6th September 2018, 11:19   #2665
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Actually, this is how it could happen:

There are 16 lakh crore 500 and 1000 rupee notes in circulation.

Post demonetisation, assume 14.4 lakh crore (90%) comes back.

You quickly turn the notes to hard board.

Print 16 lakh worth of new currency.

16-14.4 = 1.6 lakh crores goes into...

See, no extra currency printed, no inflation. All the black money is now in party funds.
You forgot one step where RBI say's 99% of the currency is back

Here's more evidence of the loot
https://thewire.in/agriculture/modi-...ts-in-one-year
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Old 6th September 2018, 11:27   #2666
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Originally Posted by extreme_torque View Post
You forgot one step where RBI say's 99% of the currency is back

Here's more evidence of the loot
https://thewire.in/agriculture/modi-...ts-in-one-year
Edited.

Actually, the more you ponder over it, the more sense it makes. The timing of replacing Raghram Rajan with Urjit Patel only strengthens the suspicions. They made sure all positions are filled with their stooges before executing the scam.
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Old 6th September 2018, 12:01   #2667
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Edited.

Actually, the more you ponder over it, the more sense it makes. The timing of replacing Raghram Rajan with Urjit Patel only strengthens the suspicions. They made sure all positions are filled with their stooges before executing the scam.
Whatever our views which we all are surely entitled to Urjit Patel is not a stooge or incompetent as some may believe. He has worked in BCG, IMF etc before he came here as Governor and had a very decent track record. Why this approach that if someone works as a team member and does not pander to the media he is a stooge and if someone makes confronting the Govt a hallmark (like RR) he is effective? As an SME businessman I can say that RR's policies of curtailing credit affected SMEs like me very badly and stalled growth despite having signed contracts on hand. RR is a bright and charismatic man no doubt with a high IQ and certainly his approach on occasion troubled the Govt but at least this one SME entrepreneur is not willing to put him on a pedestal. Every senior Govt functionary be it the RBI Governor or Army Chief or Principal Secretary has to ultimately function within the broad political direction of the elected polity and not be the 'outstanding' guy. That bit RR did not understand in my humble view.
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Old 6th September 2018, 12:32   #2668
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Whatever our views which we all are surely entitled to Urjit Patel is not a stooge or incompetent as some may believe. He has worked in BCG, IMF etc before he came here as Governor and had a very decent track record. Why this approach that if someone works as a team member and does not pander to the media he is a stooge and if someone makes confronting the Govt a hallmark (like RR) he is effective? As an SME businessman I can say that RR's policies of curtailing credit affected SMEs like me very badly and stalled growth despite having signed contracts on hand. RR is a bright and charismatic man no doubt with a high IQ and certainly his approach on occasion troubled the Govt but at least this one SME entrepreneur is not willing to put him on a pedestal. Every senior Govt functionary be it the RBI Governor or Army Chief or Principal Secretary has to ultimately function within the broad political direction of the elected polity and not be the 'outstanding' guy. That bit RR did not understand in my humble view.
I haven't studied either Rajan or Patel deeply to vouch for either of them, but my only point was Patel was somebody who would comply with the masters designs than Rajan - who, reportedly was against demon. The only other place where I had heard about Rajan was in a documentary where I saw him predicting the 2009 financial crisis back in 2005 itself. I hadn't heard about Patel until he was made the governor.
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Old 6th September 2018, 13:21   #2669
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Thankyou blacksport for your candid and balanced reply. While we may hold different views I respect you more with this balanced tone. This is a genuine compliment.

RR was brilliant no doubt but one has to also express dissent in the privacy of your meetings not in the press. Anyway back to DeMo :-)
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I haven't studied either Rajan or Patel deeply to vouch for either of them, but my only point was Patel was somebody who would comply with the masters designs than Rajan - who, reportedly was against demon. The only other place where I had heard about Rajan was in a documentary where I saw him predicting the 2009 financial crisis back in 2005 itself. I hadn't heard about Patel until he was made the governor.
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Old 6th September 2018, 13:24   #2670
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Whatever our views which we all are surely entitled to.. put him on a pedestal. Every senior Govt functionary be it the RBI Governor or Army Chief or Principal Secretary has to ultimately function within the broad political direction of the elected polity and not be the 'outstanding' guy. That bit RR did not understand in my humble view.
The policies that Raghuram Rajan brought in flagged the NPA problem and instead of kicking the can down the road, the government and banks had to handle the issue. The party stopped, and of course, it meant that he wouldn't be considered for another term. He was not taking on the government as you put it, central banks are independent of the government and that's how it is in most mature democracies. Only banana republics have pliant central bankers and the effect of that can be seen in horror stories reported from those places.

Army chief and principal secretary are not in the same category, they better be under the thumb of the ruling dispensation. The long overdue cleanup in the banking sector has cut some really slimy sharks to size, this happened because the RBI forced the government's hand.

The info is from a professor who has worked with the banks and the regulatory agencies, his understanding of the situation is unmatched to anything I've read here.
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