
India’s Botched War on Cash - firasd
https://hbr.org/2016/12/indias-botched-war-on-cash
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WWKong
Yet 90% of my social circle (middle-upper class India) is in strong favor of
this seemingly terrible move by Modi government. It is not unlike the support
Duterte has seen in Philippines.

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firasd
I think schadenfreude and Utopian promises (especially from a leader they
already support) have a strong grip on people. At this point though the pro-
demonetization rhetoric in India is running out of steam. First it was going
to be a 'surgical strike on black money' that would end corruption and
terrorism, so you had to stand in bank queues for your country the way
soldiers stand at the border; then it was about 'going cashless' and digital
payments; by now it's clear that the main thing that's needed is to print new
notes as quickly as possible.

Almost everyone who was rich and corrupt on 7 November 2016 will still be rich
and corrupt an year later.

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vfclists
Why don't Indians continue to use the 1000 rupee notes? They can still be used
so long as they are not forged or totally damaged and people are still willing
to accept them. If there is trust they can be used just like bitcoin. A group
of entrepreneurs can create a database of 1000 rupee notes and their owners
just like normal banks and destroy them afterwards if they so wish. All the
owners have to do is to make transfers between the accounts and they should be
fine. So long as there is trust and reliability what could go wrong, and how
would that differ from Bitcoin?

What stops people from creating a Bitcoin type currency based on unwanted 1000
rupee notes?

By the way isn't the amount of 1000 rupee notes in circulation exceed the
total value of all Bitcoins creatable?

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WWKong
Because without it being a legal tender it is just paper. Are you thinking it
will at least be a standard looking paper with unique serial number? That is
plausible, but then there is no one to check/enforce counterfeit notes which
will flood the system.

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vfclists
The term legal tender is practically a meaningless term. It just means that
the government forces you to accept it. You also forget that electronic money
is basically counterfeit money which gets devalued when central banks print
more money. After all if central banks "print" more electronic money are there
any serial numbers on the "notes"?

Which is why I added the point after the notes being destroyed once they
entered the Bitcoin type system. Of course an institution taking in the notes
would have the ability to check if they are counterfeit or not, not to mention
that some central banks are unable to detect counterfeits of their own
currency. Lets be honest, how capable are the banks of detecting that old 1000
rupee notes being deposited with them are not counterfeit?

If anything the new currency created from old 1000 rupee notes would hold its
value better in the long term compared to the rupee term as there is only a
limited amount of them in circulation.

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rumcajz
One would expect people faces with lack of cash to adopt some substitute
currency. Is that happening?

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firasd
Not really on any scale. Mostly the liquidity crunch is slowing down or
shuttering business activity. There is new cash being produced, it's just not
enough and not circulating.

