DEMONETIZATION & CONSTITUTIONAL MORALITY

On 8th November 2016 government of India issued a diktat informing its citizens that higher denomination notes i.e., Rs. 1000/- and Rs. 500/- shall no more be a legal tender. The explanation given by the government was that the move was initiated with a view to curb the menace of corruption, terrorism, fake currency in circulation, drugs smuggling, espionage etc., which according to those issuing the diktat was having an adverse effect on Indian Economy. The mainstream media and citizens supported the initiative as a nobel one, believing that end result will only be a beneficial for their countries future.
However, reading the notification which was issued by the Ministry of Finance one would find that it was the Board of Governors of the Reserve Bank of India which had recommended that higher denomination notes i.e., Rs. 1000/- and Rs. 500/- shall cease to operate as legal tender.
If anyone reads the Indian Constitution one would nowhere find the mention of Reserve Bank of India, nor would anyone find the mention of any constitutional powers it would have to even issue such a recommendation. Many would unfortunately argue that Reserve Bank of India Act, 1934, under section 26(2) empowers Reserve Bank of India, by law to decide what shall and shall not remain a legal tender. What is hilarious to note here is the fact that the words used are “legal tender” and not money nor currency which of course many would know are different things altogether. The point I try to make is that people in India need to awaken to this very fraud of central banking, in the sense that Bretton Woods Agreement which took place in 1944, even prior to the World War II had ended, by the surrender of Axis powers in 1945, had made the US dollar the world reserve currency and every other currency including the INR was pegged against it (now how did this happen when the World War II was still on). What Indians need to understand is the fact that even though they got independence on 15th August 1947, the appreciation and depreciation of INR still remains at the mercy of the US dollar and hence there is a urgent need to question if they have secured their independence in truest sense. Getting back to the Reserve Bank of India, Indians need to understand firstly that those who run it are not the elected representatives. Now, again may would argue that Reserve Bank of India Act, 1934, provides that those who run it are appointed by the government, but unfortunately miss the point that the central bank is not administratively, financially or functionally under the control of the Indian government and due to which they remain free to take their own decisions, which without doubt are to suit their own interests. The need of the hour therefore is to start asking legitimate questions like – “who gets the 1st access to use the printed currency notes or how many currency notes of various denominations are printed till date and who got the 1st access to use them”. Why not take the questions a bit deeper and ask as to how does some central bank decide the monetary policy, what is the role of the Ministry of Finance, and more importantly why did the framers of the Indian Constitution fail to even mention the Reserve Bank of India having such wide array of powers.

Sadly this demonetization thing is so absurd that Indian economy which in my opinion is 90% cash based, is going to face severe ramifications while it experiences deflationary spiral, to begin with on the poor, which will slowly creep into the lives, and, start affecting the salaried middle class. While declaring Rs.1000/- and Rs.500/- as being no more a legal tender, no mention was ever made to make India a cashless society, as the government had assured that new Rs.2000/- and Rs.500/- currency notes would be issued. So from where did this cashless thing ever come into being? And if to make cashless was the intention, why were new currency notes of Rs.2000/- and Rs.500/- issued in the first place? As of now the effects of the new Rs.2000/- currency notes is not that evident, but when money velocity of the new Rs.2000/- would pick up, India risks entering severe hyperinflationary spiral, where even basic goods and services would become unaffordable. The reason I say this is because the kind of economy India is, it is an impossible task to make it completely cashless, even if using cash was made a penal offence, as many living in villages, and why only villages even cities, yet do not have bank accounts, nor have access to any internet or even have an idea of how to use apps on android phones.

I. So what has demonetization in India achieved:-
a. Destruction of savings;
b. Severe deflation which only hyperinflation can correct;
c. Pain and suffering for everyone, as in the daily wage labourers, middle income households, farmers, students living away from families etc;
d. Rising debt burden;
e. Standing in long queues at the banks and ATM's for hours;
f. Loss of productive hours;
g. Bail outs for banks reeling under rising number of NPA’s;
h. Blind support from those who are yet to be affected;
i. Unnecessary capital controls on purchase of gold;
j. A steady rise in crime rates would also happen; &
k. Centralization of power.

II. Benefits of demonetization in India:-
NONE/off days from work.

III. How to fight this constitutional immorality:-
a. start asking legitimate questions like:-
i. who gets the 1st access to use printed currency notes;
ii. how many currency notes of various denominations printed till date and who got the 1st access to use them;
iii. how can or why do we need some central bank to decide the monetary policy;
iv. are we really independent when the INR fluctuates at the whims and fancies of the US dollar; &.
v. what is fractional reserve banking and meaning of Repo, Reverse-Repo, Cash Reserve Ratio, Statutory Liquidity Ratio & Marginal Standing Facility.

Readers should come up with questions depending on their jurisdictional requirements, so as to go deeper and understand the root cause of all troubles in the world, which in my opinion is attributable to the menace of central banking, be it wars, economic depressions, recessions etc. To non Indian readers replace Reserve Bank of India with the name of your central bank and refer to your constitution, and start asking questions on similar lines for the sake of humanity's future, as I believe this is a perfect time in our lives to understand what a sovereign human being really means.