Wednesday, November 30, 2016

There are more than 1.2 billion people in India, and the government messed up their money

https://en.wikipedia.org/wiki/India

"Currency withdrawal: Cash crunch continues on eve of pay day

Ahead of the expected rush by salaried employees and pensioners to withdraw cash to meet monthly requirements, the Reserve Bank of India (RBI) has restricted the withdrawal from Jan-Dhan accounts to Rs 10,000 per month to check the misuse and withdrawal of cash from such accounts.

Imagine not being able to get money to buy groceries

 On the other hand, the acute shortage of cash continued to dog banks, which are expecting long queues outside ATMs and branches from December 1 when salaries will be disbursed to many employees in firms across the country and by the government to its staffers. While many of the branches are yet to get new Rs 500 notes, Rs 2,000 and Rs 100 notes are in short supply, bankers said.

The Indian government created a shortage of currency notes 
and the event is blowing up in their faces,
which may lead to social unrest among a population of 1.2 billion people

...the next one week to 10 days are going “to be much more tense because a huge number of employees, workers and pensioners would throng the bank branches to draw from their salary credit and non-availability of enough cash may lead to serious issues of law and order”.

...many bank branches said they are getting less than half of the required cash on a daily basis."

http://indianexpress.com/article/business/business-others/demonetisation-mumbai-pay-day-atm-bank-rush-4404091/

And then someone at the governmental level 
who has reached the pinnacle of incompetence 
does something really stupid;

"India cinemas ordered to play national anthem

India's supreme court has ruled that the national anthem must be played in every cinema before a film is screened.

Judges said the order should be enforced within 10 days and audiences must stand when the anthem is played..."

http://www.bbc.com/news/world-asia-india-38155630

Athenian money…defined a pattern
which was to repeat in other empires which were to follow,
dominance of trade, influx of gold to balance exports, public wealth,
liberty, overconfidence, the discovery of loosely managed money
as a stimulating solution to stagnation in an economy near its zenith…,
before finally the emptiness of the monetary promise was exposed,
leading to rapid national collapse.

Paul Tustain

In the late 1860’s, central European government supported lenders
issued debt for municipal, residential and commercial construction
as amplified tales of profit, leverage and real estate values increased
creating a credit induced building boom
until Britain shifted wheat imports from Central Europe and Russia
to lower priced grain from the American Midwest after 1870
followed by other foods, kerosene and livestock

Economic growth stalled
after The Coinage Act of 1873 was signed into law on February 12th
initiating a gold standard by eliminating silver coin production
deflating American money supplies

Vienna’s stock market crashed in May 1873
causing bank to bank lending declines, loss of confidence
financial distress, and higher interest rates

In September 1873, Jay Cooke & Company
a major component of the United States banking establishment
found itself unable to market several million dollars
in Northern Pacific Railway bonds

As Cooke was about to swing a $300 million government loan
…reports circulated that his firm's credit had become nearly worthless

On September 18, the firm declared bankruptcy

Wikipedia

After speculators built beyond utilization capacity
indebted American railroad related companies began defaulting
and US stock markets crashed in late September 1873
as hundreds of banks closed

Those with enough capital reserves
like Andrew Carnegie and John D Rockefeller
acquired bankrupt businesses for substantial discounts

As unemployment rose, business leaders advocated protectionism
elected officials identified and targeted scapegoats
while the working poor protested, embraced religion established unions
and rioted

Why did John F. Kennedy attempt to bypass the Federal Reserve in 1963?

"With the exhaust-less reservoir
of the Government of the United States furnishing easy money,
the sales increase, the businesses enlarge, more new enterprises are started,
the spirit of optimism pervades the community.

Everyone is making money, everyone is growing rich.

It goes up and up…until finally someone whose judgment was bad,
someone whose capacity for business was small, breaks,
and as he falls he hits the next brick in the row, and then another
…and down comes the whole structure.

That is what happened to greater or less degree
before the panic of 1837, of 1857, of 1873, of 1893 and of 1907.

Elihu Root
US Senator, Nobel Laureate

If Germany’s central bank suspended the right
to redeem gold backed Reichsmarks during World War I,
and 170 Reichsmarks bought an ounce of gold in January 1919,
why did an ounce of gold cost 87,000,000,000,000 Reichsmarks in November 1923,
like Venezuela now?

There is an element in the readjustment of our financial system,
more important than currency, more important than gold,
and that is the confidence of the people.

Franklin Delano Roosevelt
Replaced Herbert Hoover as US President in 1932
after government intervention failed to mitigate The Great Depression

Why did the United States use its political, economic and military weight
to stabilize international trade after World War II 
by negotiating agreements obligating participating countries
not to print more money than directly backed by gold reserves,
and to maintain exchange rates within 1% of gold backed US dollars at $35 an ounce?

Government spending is the ultimate tax on the economy.

Milton Friedman
Economic Nobel Laureate

Why did John F. Kennedy attempt to bypass the Federal Reserve in 1963
by authorizing silver backed Treasury Certificates?

If the Coinage Act of 1965 eliminated silver in quarters and dimes
as 190,000 US soldiers deployed to Viet Nam, could war be inflationary?

Inflation is one form of taxation that can be imposed without legislation.

Milton Friedman

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