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Demonetization and cash societies


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#1 FriendofGreece

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Posted 22 November 2016 - 11:19 PM

Ever heard of demonetization? I just learned about it in the case of India where the government has declared overnight, about 1 1/2 weeks ago, that their currency in 500 and 1,000 rupees (worth around $7.50 and $15) has been rendered worthless and taken out of circulation. These bills account for 86% of the money circulation in India.

 

You see millions of Indians lining up at banks and ATM machines to exchange the worthless currency for new paper bills of 500 and 2,000 rupees, subject to a daily maximum of 2,000 rupees or something like that. Presumably, this is to tackle black market and tax evasion. Indian economy is mostly based on cash transactions so almost everything has been frozen since because people ran out of smaller denomination bills. Now I wonder why 2,000 rupees bills are introduced, if the intention is to deter tax evasion, it seems it makes it easier to keep cash as cash, unless you fear another demonetization later on. Mind you, the big tax evaders have already stashed their ill-gotten gains in Swiss bank accounts, metals or real estate, so most likely have not been affected by all this. I just wonder whether this whole exercise is worth the pains of the millions of Indians who are suffering now.

 

https://www.washingt...y-ban/#comments

 

Cash-based societies do not necessarily reflect that there is black market or tax evasion, I think. 

 

I learned that in Japan, people still use cash instead of paying by credit or debit cards, which is very surprising to me, considering the Japanese are quite advanced in electronics. 

 

My question is why do Japanese, and I don't know people in other countries, prefer cash transactions? Do they know something we don't know?





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#2 ajaxmonkey

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Posted 23 November 2016 - 01:57 AM

Isn't it obvious?

 

Without cash you are on the leash. Some bureaucrat clicks on a button blocks your accounts and you have ZERO funds. Is there a better way to control people?



#3 FriendofGreece

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Posted 23 November 2016 - 02:43 AM

Sure control if you have cash. However, the government could decide to make demonetization any time like in India.



#4 admin

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Posted 23 November 2016 - 04:57 PM

In Greece too most people still use cash. Black market and tax evasion thrive in those societies. The government cannot tax what they cannot see.

However, complete reliance on plastic money would be a dangerous thing, as ajax mentioned earlier.



#5 ajaxmonkey

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Posted 23 November 2016 - 08:50 PM

In Greece you have Capital controls. So your access to cash is limited.
And using plastic makes it easier for the government to keep their hands in your wallet. In fact, when you use plastic you've left your wallet with the government and they decide how much of an allowance to grant you and how much to take.
And they take when you produce and when you consume.

Even if you choose to survive on plain white rice, they'll still charge 24% of the purchase value as VAT. And it doesn't matter if the rice is produced in Vietnam or by the mouth of Aliakmon.
The pot you cook your rice in, the stow you cook it on... 24% VAT when you purchase those.
The electricity or gas you use to cook it? You pay 13% VAT on those.
And if you use electricity you also pay a 20% hike to finance Siemens supplied photo-voltaic installations.

And you have to earn money somehow right? If you make a halfway decent income you pay close to 60% in taxes, health coverage and pension fund contributions.

And what do you get in return?

Infrastructure? Falling apart.
Public safety? Non existent.
Education? A joke.
Health services? If you don't have cash you go on the waiting list.
Pensions? You pay for those who receive them now and when your time comes you'll get NOTHING.

So why exactly do we pay taxes?

Regardless.
People in Greece already live as State Slaves. Plastic makes it easier to keep tabs on things for the government but lets not forget that cash circulation is also government controlled.

Many in Greece have moved beyond cash or plastic. Grocery sales have fallen by around 30% since the crisis started. Part of that is due to barter deals and off grid production. But our government is already busy trying to figure out how to get their hands on those.

#6 FriendofGreece

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Posted 23 November 2016 - 09:21 PM

Either way you do, cash or plastic, it is government controlled because the money is printed by the government and it can change rules any time. With plastic, there is tracking of everything you spend on. 

 

In the case of Greece, the imposition of VAT and high taxes is made to pay the debt, is it not? Isn't it mandated by the EU?

 

The Greeks do not have a choice but to fall back on barter, since they do not have any more money. Assuming they even have a job to produce money, the money left after the taxes and VAT is minimal. 

 

It is actually a good point, In India, with the demonetization going on, people are bartering too. 



#7 ajaxmonkey

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Posted 23 November 2016 - 09:55 PM

In the case of Greece, the imposition of VAT and high taxes is made to pay the debt, is it not? Isn't it mandated by the EU?


Minimum VAT levels are mandated by the EU Greece is charging twice the minimum mandated though. And it is not directly related to the Debt.
Greece was asked to reduce spending. The Greek government insists in spending above its means, mainly on the public sector, and tries to still meet the budget requirements by increasing government revenue by increasing taxation. Which is of course suffocating the private economy and drives the country into a downward spiral.
Getting Off the Grid has become for many in Greece a necessity. I'm from rural Macedonia and many of my cousins grow their own food, raise chickens, sheep, geese, chop wood in the mountains to burn in their wood stoves. And they even sell fire wood and produce to earn cash. Which is getting increasingly difficult since controls have been stepped up and the penalties have become insanely high.

#8 FriendofGreece

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Posted 24 November 2016 - 01:06 AM

I am not sure that the Greek government still spends above its means. There have been 6 or 7 rounds of austerity cuts already, pensions have been slashed to the bone so to speak, I don't know about public service cuts, but Greeks are living grace to soup kitchens and the churches. Greeks are starving and I don't know how far more they can be stretched before a revolution happens.



#9 FriendofGreece

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Posted 27 November 2016 - 07:05 PM

Despite around 60 persons having died because of demonetization, Modi has kept silence, except for some narcissistic tears for himself how much he sacrificed his life for public service. People are instead told to wait out until the end of the year and see the benefits of demonetization. Now it turns out one of his objectives of demonetization is to make India a cashless society, one of his pet projects. "Incredible India"!

 

http://www.forbes.co...e/#21047bf8d296



#10 FriendofGreece

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Posted 27 November 2016 - 07:12 PM

It is the poorest who died, who do not have bank accounts or mobiles, who are uneducated, etc. who suffer the most out of all this demonetization. They are also the ones who are neglected going forward with cashless society.

 

http://www.bbc.com/n...-india-38048051






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