by Pater Tenebrarum, Acting-Man.com:
It is well-known that India’s government wants to coerce its population into “modernizing” its financial behavior and abandoning its traditions. The recent ban on large-denomination banknotes was not only meant to fight corruption.
In fact, as our friend Jayant Bhandari has pointed out, fresh avenues for corruption immediately opened up upon enactment of the ban (see “Gold Price Skyrockets in India After Currency Ban” – Part 1, Part 2 and Part 3).
It is a nigh apodictic certainty that governments are lying – whether outright or by omission – when they impose such drastic measures. It should be clear how the State operates once one recognizes its true nature and realizes that “we” are definitely not the State.
Thus there are several reasons for the currency ban that have nothing to do with the official justification forwarded by the government. One is of course that the government hopes to be able to confiscate a sizable proportion of the citizenry’s – allegedly “ill-gotten” – wealth.
A special one-off tax penalty will be imposed on deposits government officials arbitrarily deem “too large” – under the cover that only criminals will be deprived of their possessions, for the benefit of public at large (meaning: Modi’s supporters. As an aside, this may well turn out to be a major miscalculation).
Another reason is that the government wants to coerce people into transferring much of the cash they currently hold into the banking system. This will transform their cash into digital money substitutes.
This increase in deposit money will be a great boon for India’s fractionally reserved banks. It represents extremely cheap funding for them and will enable them to vastly expand credit creation ex nihilo. At the same time, the government will achieve far greater control over the economic life of its citizens.
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