tag:blogger.com,1999:blog-6704573462403312459.post6058303176601397055..comments2024-03-29T02:53:03.321-04:00Comments on Moneyness: Small steps, not a large leap, towards less black money & more digital moneyJP Koninghttp://www.blogger.com/profile/02559687323828006535noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-6704573462403312459.post-49042310399954719792017-01-24T04:43:59.955-05:002017-01-24T04:43:59.955-05:00On President Andrew Jackson's policies causing...On President Andrew Jackson's policies causing an economic Depression:<br /><br />p. 297-298 <br />"Making America: A History of the United States"<br />https://books.google.com.mx/books?id=_eTKAgAAQBAJ&pg=PT338&lpg=PT338&dq=andrew+jackson+depression+currency+circular&source=bl&ots=1vLgefKffL&sig=infoAta6HU7Vniue3RMMArPAvJ0&hl=es-419&sa=X&ved=0ahUKEwj_1ebEttrRAhUOzGMKHVEgBqE4ChDoAQhXMAg#v=onepage&q=andrew%20jackson%20depression%20currency%20circular&f=falseAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-68955488934253239982017-01-24T03:47:23.160-05:002017-01-24T03:47:23.160-05:00Couldn't taking peoples currency and ruing a s...Couldn't taking peoples currency and ruing a significant part of the economy be considered criminal? If not the same result of a large crime?<br /><br />It seems so counter productive.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-4541499698110215612017-01-24T03:41:40.168-05:002017-01-24T03:41:40.168-05:00Also, if other notes were promised in return for t...Also, if other notes were promised in return for the old notes but not delivered that could be considered fraud.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-11434338146832239462017-01-24T03:37:50.916-05:002017-01-24T03:37:50.916-05:00I believe removing currency from the economy will ...I believe removing currency from the economy will reduce the amount of transactions and thus taxes.<br /><br />1. This will reduce the white money taxes collected. Because it reduces transactions an will hurt or ruin businesses. Ruined businesses will reduce the future economic output.<br /><br />2. Marginal businesses that help the economy along may not be able to pay tax any way. The answer their would to be some way to get them profitable enough to pay tax.<br /><br />3. I don't understand why an experienced tea merchant would not see such action damaging the economy.<br /><br />4. This punishes the innocent (every one). So is unfair. And would be against the spirit of the constitutions of the united states and possibly many other countries. <br /><br />5. I read that the receipts of high denomination notes were so high that the remaining money was much lower than the black money estimate. That alone might be good reason to end this experiment. I think the common practice is to convert illegal money or (depreciating money) to some thing else (or to some thing that depreciates slower.)<br /><br />6. I think this reduces the liquidity of the whole economy and banking system. In modern banking systems currency held by banks and deposited in the central bank or clearing banks are reserves. Reserves are required to support credit money. As if reserves are imprudently too low check clearing cannot be done efficiently or fairly. If reserves are reduced the credit money or bank money is at risk. Since the credit money is often >= than 10 times the currency it is the most significant amount of money used. Take for examples, Greece's financial problems or the depression in the United States caused by President Andrew Jackson by his policy that removed gold money (paper money was credit money redeemable for gold money) from the economy and caused bank failures and loss of deposits.<br /><br />So, if I were India or her leaders, I would consider this a failed experiment or mistake and reintroduce the money.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-11411500104006594132016-12-20T22:50:50.440-05:002016-12-20T22:50:50.440-05:00Look, Modi banned some 80% of cash value in circul...Look, Modi banned some 80% of cash value in circulation. As you point out, some of that may be swapped into small bills. And oh my goodness, middle class and wealthy Indians are plugging into the black mafia-run currency market like never before. <br /><br />New criminal networks are being formed, JP, with lots of secrets and blackmailable crimes that bind people together for the long term. The black market and number of criminals has likely never been higher in India, all thanks to Modi. <br /><br />I see no evidence of the three bribe legalization, larger notes, or private notes happening. All cloud cookoo land. What I do see is an explosion in the profitability of criminal black markets in India. Criminal networks become very profitable in prohibition - whether alcohol or currency - and so you get more of it. And, ultimately, more violence and criminal diversification into new lines of criminal business, whether meth or heroin or protection rackets<br /><br />Modi just made millions of Indians into law-breakers who have to pay black market criminals for financial protection. This is a massive subsidy for criminals that will sustain criminality for decades to come. That's the legacy, not some technocratic half backed cashless society dream. Just like al Capone, just like meth labs.<br /><br />Bans make criminals. Just where do you think you are? Scandinavia?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-66536658983048851162016-12-18T11:08:42.904-05:002016-12-18T11:08:42.904-05:00"Well, banning specific denominations all the..."Well, banning specific denominations all the way to a full cash ban, which is the goal in India, no? "<br /><br />The goal of Modi's demonetization is to cancel and then reintroduce the same banknote, the door between the old and new being used as filter for catching those with black money, and as a way to nudge licit users of cash to use bank money. The idea is not to ban money, not like Rogoff's abolition of high denomination notes.<br /><br />"The piece on dry/wet counties and criminal networks was an eye opener to me. Being pushed into criminal networks has long lived consequences."<br /><br />In this post I've suggested: 1) Basu's legalization of bribe giving; 2) larger size banknotes; and 3) privatized note distribution. While you provide an interesting link, how does the analogy to alcohol prohibition apply to my three points, or to Modi's cancellation/reintroduction?JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-10033232764078533772016-12-17T13:25:03.265-05:002016-12-17T13:25:03.265-05:00Well, banning specific denominations all the way t...Well, banning specific denominations all the way to a full cash ban, which is the goal in India, no? <br /><br />Please address the issue. The piece on dry/wet counties and criminal networks was an eye opener to me. Being pushed into criminal networks has long lived consequences. <br /><br />BTW, Rogoff cash curse was not an eye opener. His stuff is not scientific. It's closer to a polemic. Not persuasive. More an article of faith than compelling evidence. His "this time is different at least had evidence, though that was also incredibly flawed. <br /><br />Mao and Stalin also had their baseless economic theories, and academics who backed them. Modi appears cut from the same cloth. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-49907716864671317882016-12-16T10:32:23.760-05:002016-12-16T10:32:23.760-05:00Chaos is a feature of any aggressive demonetizatio...Chaos is a feature of any aggressive demonetization. You can't design one that doesn't have a wide blast radius, because the more preparation you do, the more information leaks out, and the less successful it will be in its aggression.<br /><br />My feeling is that Modi's demonetization will have some degree of long-term success in driving Indians into digital money and flushing them out of the underground economy, and the money supply data will show this.<br /><br />But small steps are preferable to a big leap.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-38640959045716179192016-12-16T10:26:43.262-05:002016-12-16T10:26:43.262-05:00"...than cash bans."
You use the phrase..."...than cash bans."<br /><br />You use the phrase cash ban several times. Where in my post did a say anything about banning cash? Not even Modi is banning cash, he's implementing a note switch along with introducing a new higher note.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-46807491104905264112016-12-16T03:06:47.680-05:002016-12-16T03:06:47.680-05:00I am confused.
Did not you argue that chaos is a f...I am confused.<br />Did not you argue that chaos is a feature, not a bug?<br />http://jpkoning.blogspot.co.at/2016/11/modis-demonetization-chaos-is-feature.html<br />But now you advocate small steps and chaos seems to be a bug again?<br />Have you changed your mind?Viennacapitalisthttp://viennacapitalist.comnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-34133201369054746122016-12-15T15:36:31.281-05:002016-12-15T15:36:31.281-05:00Good piece, JP. But restricting cash does not cha...Good piece, JP. But restricting cash does not change the positive incentive to cheat. The incentives to cheat in India include high taxes, tax complexity, bureaucratic corruption, weak property rights, and arbitrary justice. <br /><br />Restricting cash changes none of this positive incentive to cheat. Cash bans only raise the negative price of cheating. So, please consider that India's *high taxes, tax complexity, bureaucratic corruption, weak property rights, and arbitrary justice* could be an immoral system. <br /><br />Why is is moral to war against cash usage by poor Indians? Aren't they are simply trying to protecting themselves against immoral taxes and laws? Reforming the laws and lowering incentives to cheat would be a more humane, effective, and moral approach than cash bans.<br /><br />Also, consider unintended consequences. Bans can actually deepen and broaden corruption networks. These *temporary work-arounds* that you favor don't automatically disappear when the banks reopen and the cash disappears. <br /><br />The criminal "gateway drug" is the network. When people get plugged into a dark market network, even temporarily, it adds sticky demand for dark activities. India may find itself with a larger black market after all this -- because people will adapt, the incentives will still be there, and their adaptation will be durable. <br /><br />JP, you might even discover that the ban-cash-because-criminals-and-tax-evaders argument is bogus. <br /><br />FYI, banning booze in the US created criminal networks from the neighborhood speakeasy to al capone to meth labs now. <br /><br />What sort of criminal networks will thrive under cash bans?<br /><br />https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2650484&download=yesAnonymousnoreply@blogger.com