DEMONETISATION & BLACK MONEY — BLOOD BROTHERS
by Neha Bisht -

Nine nations have undergone demonetisation in recent past. The most recent being India.
Nigeria, Ghana, Zimbabwe, Pakistan, North Korea, Soviet Union, Myanmar all these nations suffered disastrous impact on their economy. Their currency fell. Resources became unavailable to people. Businesses crashed. Cash became scarce. Riots broke out. Finally the economies could not bear the burden of Demonetisation and collapsed !!
India is a modern example of Demonetisation in the digital era. Yet it is reeling under the pressures of Demonetisation . Inflation has shot up. ATMs are not as free flowing as they used to be. There is increased taxation. Small traders are shutting down. Country is not ready for complete online transactions. Business debts are increasing. Farmers are committing suicide. Government is pleading people to re-monetise the country !!! But people have become cautious. !!!
And this is a bad omen !!!
As Robert Prechter says “It is not the economic crash that causes the cautious businessman. It is the cautious businessman that causes the economic collapse !!! “
Governments say that the aim of Demonetisation is to remove black money and clean the economy. I say this is bull-crap !!!
Firstly, black cannot be removed. It can only change pockets.
Secondly, all economies run on black money circulation. Without the greasing of black money, economic wheels will jam.
Thirdly, black money is neither good nor bad. It is just plain and simple money.
Lastly, aim of Demonetisation is not to bring financial well being. It’s aim is to change the pockets of wealth !! And strengthen the existing pockets of wealth. And inject fresh blood into the parallel economy !
It is important to understand that the outcome of all Financial policies is for the money to be channelised into certain pockets. If the common man is facing a cash crunch post demonetisation, then where is the money going ?
Let’s examine the Indian scenario !
A huge section of Indian economy is based on liquid cash transactions.
The farmer, the wholesale market, the indigenous local industry, the local grocer. — These are people whose trade depends on the liquid cash transactions. This segment keeps cash at home. They do not have the know-how to stash money away in Foreign shores.
And this cash flow, (via local trade), is India’s Internal Economy. A thing to note is that, this Internal Economy also cushions the adverse impact of world economy on Indian market.
Recession did not hit India as bad as it hit USA or Europe. The cash cushion absorbed the blow.
However, demonetisation destroyed this cash cushion.
Demonetisation did not bring the actual black money or the real culprits into the net (As it claims to do). The real black money is safely stashed away in investments and in foreign banks and in foreign exchange.
What it actually did is, hit the small time trader.
Demonetisation took this money away from local market and put it into banks. Thereby bailing out the ailing banks. And making finances available for loans and credits.
By destroying its own internal economic cushion, India has today become vulnerable to the world economy. It has lost its safety net. Foreign investors begin to exert more control.
The foreign deals made, will undoubtedly bring more financial movement into India. Loans will increase and so will credit. The credit money system will expand exponentially.
We all know what happens when the Credit Money System becomes an inverted triangle, balancing precariously on a weak Fiat Money System.
It leads to a short term illusion of financial well-being. A bubble of prosperity, based on borrowed assets, walking on credits. It leads to an inevitable economic collapse.
Demonetisation, In India and many other nations has created new channels of movement of black money. It has successfully strengthened the parallel economy of the rich and powerful. Unfortunately , at the cost of the foolish common man !!
Demonetisation always raises the question of Black Money !!!
The “evil” that the “good governance” promises to remove with the “weapon” of Demonetisation.
“Is Black Money really bad ?” …..
Money is money. Black or white. And they both are important.
Black Money is unaccountable money.
If I have unaccountable money , my purchasing power and investment power increases. Somewhere in the chain, the black money turns white through product and service taxes levied on my purchases and investments.
If I purchase more, invest more freely, I actively contribute to the economy. And all because I have a cushion of black money.
Black money ensures that the wheel of daily transactions keeps rolling,despite official roadblocks. Black money increases a businessman’s credibility, and capacity to absorb financial shocks and invest with immediacy.
No economy can survive only on white money. And as my friend says “black money is invincible”
The result of Demonetisation ( whether successfully implemented or a disaster ) is always the same.
It leads to a disproportionate increase in the Credit Money System. And it creates a massive imbalance between Credit Money and Fiat Money. Debts increase.
The outcome is —
1)To repay this debt, the government levies more taxes. Taxation increases.
2) Banks give out easy loans. But all loans are debts. They only add to the Credit Money System.
3) The banks and government tighten the noose over your money. Your own money is not freely accessible to you.
4) ATMs and cash withdrawal systems face a cash crunch !!
5) Inflation skyrockets ! A situation of hyperinflation arises !!
6) Rich become richer. Poor become poorer. Middle segment suffers and disappears
7) Purchasing power decreases.
8) An atmosphere of cautiousness and saving is generated.
9 ) People stop actively contributing to the economy.
10) Broth of Economic collapse begins to brew .
Psycho-social Impact is worse —
1) Severe rise in crime
2) Unemployment
3) Poverty
4) Suicides
5) Riotous situations
6) Overactive black market serving the rich and powerful.
“It’s great that people get together and collaborate, talk about the facts and the analysis, all in the interest of having a great financial system” — Jamie Dimon.
But never be fooled by the government. They are robbers with legal rights. Always remember this —
• Black money is good! Black money is your cushion! Black money makes you rich! You have a right to black money ! Get your hands on that black money as soon as possible !!!
• Ground rule for good living, safety and security is — Less White, More Black !!!
• Gold is the only real money.
Henry Ford once said “It is well enough that people of the nation do not understand our banking and monetary systems. For if they did, I believe, there would be a revolution before tomorrow morning.”
And before I go, a gem from Warren Buffet
“Rule 1 — Never lose money
Rule 2 — Never forget rule number 1 !!!! “

By nehab
