Conspiracy Theory Of Demonetisation.docx

Conspiracy Theory Of Demonetisation: Top Conspiracy Theories about India’s Demonetisation Mess The sudden demonetisation of large denomination currency notes by the Government of India on 9th November 2016 has created a mix of shock, horror, confusion, speculation and conspiracy theories across the Subcontinent. The Government of India, led by BJP Prime Minister Narendra Modi, claimed that this was a necessary measure because,

These large denomination notes were being used to hoard “black money” in India. Since demonetisation would require such notes to be deposited in a bank account or exchanged at the bank during a small window of time, the Government, eagerly monitoring the banks, would be able to spy on such “hoarders of black money” and seize/penalize/confiscate their moolah. Those who did not deposit their “black money” would be expected to sit crying while it turned into toilet paper after the deposit window expired. (And those of you without access to a bank account in India are expected to hang on these currency notes as souvenirs). A very big portion of these notes was being counterfeited by a foreign power(s). Since these arguments are too simplistic to suffice readers of this website, Cabal Times presents the Top Demonetisation Conspiracy Theories currently swirling across the Subcontinent.

As I have said before, my economic perspective has always been that of the Austrian School of Economics, which advocates gold-backed currency (or gold as currency). And India’s Demonetisation Mess only vindicates this perspective. The fact that a Government could suddenly disavow and illegalize legal tender that it once issued, completely stripping it of any value whatsoever, has shaken confidence not just in the Indian Rupee, but in the very concept of “legal tender.” This could not have been possible if the currency was gold-based (gold coin, or gold threads in notepaper), as the precious metal would itself retain its own market value, even if the Government would declare it worthless.

Conspiracy Theory #1: The Demonetisation was necessary because Pakistan was counterfeiting Indian money in very large numbers Credit: The Government of India

Prior to the Demonetisation, there were rumblings of widespread unrest in Indian Kashmir. If Pakistan was indeed flooding the valley with counterfeit notes, it needed more than an Epson® All-In-One machine. It could not have done so without a little help from good ol’ Bhaaai, who happens to be an expert in such practices. For example, prior to orchestrating the Iranian “Islamic” Revolution in 1970, the Powers That Be ensured beforehand that the Revolutionaries would be able to print American dollars to suit their needs. To quote,

Years earlier, in the late sixties or early seventies, the CIA had secretly provided to the Shah of Iran a perfect set of printing plates that could reproduce US$100 bills without blemish. Also provided was an intaglio printing press. This special printing press ensures that the etched plate meets paper with tremendous force, creating the distinctive embossed feel of a genuine banknote. In addition, the Shah was also given the ink and banknote quality paper enabling him to produce perfect counterfeit US Dollar banknotes. The Shah later fled Iran and left the plates and press behind in his confusion. The whole caboodle If India is indeed dealing with a Western Intelligence Agency, they will not be able to stay one step ahead for long. And this only strengthens the case for gold. A gold-based currency would easily solve the problem of counterfeit currency. Gold exists in rather small quantities. Counterfeiting gold coin (or gold thread in note paper) would require mixing actual gold with alloys, making it an expensive undertaking, compared to the process of duplicating paper currency. A gold-backed currency could be easily counterfeited. But when the bearer went to exchange it for actual gold at the bank, he/she/it could have the notes subject to additional scrutiny and verification, weeding out the counterfeit ones. There is another reason why a gold-backed (or gold-based) currency is suitable for India. Although the people of the Subcontinent may have never cared to acknowledge it, they have already subscribed to the ideals of the Austrian School of Economics ages before it came into existence. The volatile political climate of India which featured repeated invasions and economic disruptions, meant that most Indians were always skeptical of paper currency and instead preferred gold. As a result, most well-to-do Hindus also doubled as amateur goldsmiths. A Turkic-Muslim ruler Mohammed Bin Tughluq tried to

force a brass and copper currency (and then a leather one) but failed miserably. India is the biggest producer of gold jewelry. And Indian gold jewelry is more oriented towards weight and mass, rather than the delicacy and ornateness of Western jewelry. This is because gold jewelry is considered as an investment (or a source of emergency funds) for women. Indian women learnt to attach it to their person, long before bank lockers came into existence. Another great argument for gold-based currency in India is that Indians have already become adept at determining the purity of gold, which is done using simple instruments (as opposed to the sophisticated electronic gadgets that are used to detect counterfeits in banknotes).

Very rarely do Governments officially endorse a Conspiracy Theory. But this is exactly what happened on 9th November 2016. Several unanswered questions remain. Governments usually never release estimates of counterfeits in circulation, because this undermines faith in their currency. Yet fingers were pointed to sudden increases in the circulation of large denomination notes, causing irreparable damage to the Indian Rupee. Outsiders with connections to India will be careful to always get rid of their Indian Rupees rather than once again being stuck with a wad of them. Foreign Exchanges are likely to shun the Indian Rupee rather than risk being stuck with “illegal” currency. Indian Banks, which suddenly proved that they could prevent you from accessing your hard-earned “white” money (except in measly amounts due to shortages in the newly printed replacement notes) have also lost their credibility. Why was the Demonetisation not restricted to sensitive areas where such counterfeit Rupees were allegedly being used, such as Indian Kashmir? Did the Indian Government really assume that “terrorists” too, would line up in front of banks with bags of cash to exchange their banknotes and end up being busted? Do “terrorists” have bank accounts in Indian Kashmir? (Sorry couldn’t resist). The biggest argument against this Conspiracy Theory is that the Demonetisation may have actually helped counterfeiters of all shades exchange their bad notes for good ones. Banks were working overtime, with their tired, grumpy staff having minimal time and attention for detecting counterfeit currency. But again, the rush of patriotism was a welcome relief for the Modi Government. The poor guy standing in line in front of the bank momentarily became euphoric of the many jawans he had saved on the border. Commercials were released, featuring jawans discussing how the Demonetisation was more effective than a ceasefire. But this proved to be untrue when

Pakistan yet again violated the ceasefire, and some dead terrorists were found to be carrying the new replacement notes.

Conspiracy Theory #2: The Demonetisation was necessary to bail out banks some very rich people with ties to the Government Credit: Arvind Kejriwal / Aam Aadmi Party

This theory is a rather complex one, but Arvind Kejriwal is waving several binders full of official papers, claiming to have “proof” of it. This is how it works.

Major Government owned banks, such as the State Bank of India, have been corrupted into giving very huge loans to shady industrialists, such as the BJP-friendly buffoon entrepreneur Vijay Mallya, who has now fled India for Britain, with obvious collusion of the highest levels of authority in India. The total amount of such bad loans goes up to 800000 Crores (an astronomical amount). These banks were ordered to “forgive” such loans, but could not do so without risking their own bankruptcy. These banks secretly “forgave” many bad loans immediately following the Demonetisation. The sudden deposits of old currency and limits on withdrawal ballooned their assets and lending power. A spinoff of this conspiracy theory circulating on WhatsApp® goes on to claim that Demonetisation was intended to rattle Government Owned Banks which constitute the majority of Indian Banks, and that three private banks were provided with a disproportionately large surplus of cash in new notes compared to Government Banks. This means that Government Banks = Longer Queues. This is yet to be verified.

According to sources, the group [Modi’s group] zeroed in on demonetization for the following reasons: (a) it would root out black money by rendering undeclared income in high denomination notes invalid and unusable; (b) ensure liquidity in banks reeling under

Non-Performing Assets amounting to over Rs 6.30 lakh crore; (c) it would derail the election plans of opposition parties and immobilize a big chunk of their funds in two key poll-bound states—UP and Punjab. Some more conspiracy theories are as follows: Conspiracy Theory # 3: The Demonetisation and War on “Black Money” is a Foreign/Globalist Strategy for Destroying India’s Emerging Middle Class

Conspiracy Theory #4: The Demonetisation is tied to Modi’s Electoral Promise

Conspiracy Theory # 5: The Demonetisation and Ensuing “Black Money” Witchhunt is an attempt to siphon India’s Gold Reserves

Conclusion On The Conspiracy Theories Of Demonetisation :

DEMONETISATION – A LOOK BACK AT THE LAST TWO MONTH Two months have passed since the Prime Minister announced the decision that high denominational currency notes would cease to be a legal tender. Subsequently, those notes have been demonetised. When 86% of a country’s currency constituting 12.2% of its GDP, is squeezed out of the market and sought to be replaced by a new currency, there would obviously be significant consequences of that decision. Now that the queues outside the banks have disappeared and the remonetization has moved ahead, it would be worthwhile to analyse the rationale behind the decision and its impact.

1. Steps against Black Money

The Narendra Modi Government had absolute clarity from day one that it would move against the shadow economy and black money. It’s first decision was to constitute SIT under the directions of the Supreme Court. The Prime Minister had proposed to the G-20 at Brisbane that international cooperation in sharing information with regard to base erosion and profit shifting should be expedited. The arrangement with the United States furthered this object. The NDA Government completed its agreement with Switzerland that w.e.f. 2019, details of assets held by Indian citizens in Switzerland and vice versa would be provided to each other. Since 1996, the Double Taxation Avoidance Treaty with Mauritius was being renegotiated. The treaty effectively incentivised round-tripping. It was renegotiated. Similar treaties with Cyprus and Singapore have also been renegotiated. The Black Money Law dealing with illegal assets outside India opened a window for disclosure with 60% tax and provides a ten-year imprisonment.

The Income Declaration Scheme (IDS) 2016 was highly successful with a 45% tax. The PAN card requirement for cash transaction beyond rupees two lakhs put hurdles on expenditure through black money. The Benami law legislated in 1988 and never implemented. It was amended and has been put into action. The GST, which is scheduled to be implemented this year, will provide for better indirect tax administration and being a more efficient law will check tax evasion. The demonetisation of high denominational currency notes was the big step in the same direction.

2. The adverse consequences of Cash Paper currency is a zero interest anonymous bearer bond. It has no name or history attached to it. Crime can take place with or without cash but excessive cash as a medium of exchange is favoured by the underground economy. It results in non-compliance in the matters of tax payments which creates an unjust enrichment in favour of the evader as against the poor and the deprived. Mountains of cash money reach tax havens through the hawala route from the original paper currency. Cash facilitates real time untraceable payments. Cash is the medium which funds bribery, corruption, counterfeit currency and terrorism. Ethical and developed societies aided by technology have consistently moved towards banking and digital transactions as against the excessive use of cash. Paper currency opens the doors for many vices. When Governments are able to collect more tax from tax evaders, they are in a better position to collect less tax from everyone else. Reducing cash may not eliminate crime and terrorism but it can inflict serious blow on them. States have shown that the stores of cash do not disappear on their own till Governments take active steps to reduce the quantum of paper currency.

3. The Opposition There was no social unrest while implementing such a major decision. All opinion polls conducted by independent media organizations have shown that an overwhelmingly large percentage of people have supported the Government’s decision. The opposition disrupted a full Session of Parliament. Their protests have been ineffective. Their exaggerated claims on the disruption of the economy have proved wrong. It is a tragedy that a national party like the Congress decided to adopt a political position, opposing both technology, change and reforms. It sided with black money friendly status quo. ************************************************************************

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