mauldineconomics.com / BY PATRICK WATSON / NOVEMBER 22, 2016
Two weeks ago, millions of Americans voted against Hillary Clinton because, among other reasons, we thought she would raise taxes or otherwise take our money.
Most of us didn’t notice what happened on the other side of the world that very same day. Indian Prime Minister Narendra Modi really did take everyone’s money.
Citizens of India learned, with only a few hours’ notice, that their 500 and 1,000-rupee notes were no longer legal tender. Those are—or were—the country’s largest-denomination bills and the foundation of a huge underground economy. Now they’re just paper.
The results were what you would expect: confusion, chaos, and fear. Nevertheless, you can bet other governments watched closely. India could be just the first cash domino to fall.
Modi’s “Demonetization” Turned into a Mess
I must confess to not knowing much about India—the closest I’ve ever been is hearing some Sanskrit words in yoga class. I hope to visit someday, though. When I do, I’ll have to bring my Visa card because my cash may not work there.
The Reserve Bank of India posted this notice on November 8:
Government of India vide their Notification no. 2652 dated November 8, 2016 have withdrawn the Legal Tender status of ₹ 500 and ₹ 1,000 denominations of banknotes of the Mahatma Gandhi Series issued by the Reserve Bank of India till November 8, 2016.