Yesterday I told you about the disaster unfolding in India’s economy from their Prime Minister’s horribly misguided “demonetisation policy.”
The policy has rendered 86% of cash unusable – Imagine if that happened in our economy.
As I said, “When politicians have too much power, people tend to suffer. And that’s what’s happening in India.”
Now, it seems things are deteriorating rapidly in parts of the country.
The government has already imposed capital controls and withdrawal limits – measures we saw utilized in Greece when their economy nearly went under.
As a result, massive lines are forming at banks across India, as desperate consumers try to get the new – higher denomination bills to replace their now worthless bank notes.
Lines at the banks quickly leads to panic, and panic leads to a run on the bank.
Now, it looks like that may be happening.
Watch: Bank Employees In India Beaten By Mob
— Shuvankar Mukherjee (@shuvankr) December 20, 2016
People have every right to be enraged at the banks and the government, it’s only unfortunate that bank employees – who aren’t responsible for the decisions of the government – are paying the price.
The violence seen in the video above is a clear warning signal of an economy – and society – on the brink of something very troubling.
Any banking system relies on confidence. Once confidence evaporates the system collapses. Mental fear can easily turn into tangible disaster and real suffering.
With that in mind, consider the following tweet from Indian investigative journalst Rahul Kanwal:
Last 43 days have seriously undermined whatever credibility the RBI had built up over decades. Now laughing stock — Reverse Bank of India.
— Rahul Kanwal (@rahulkanwal) December 21, 2016
It’s one thing to disagree with a decision of the central bank. But if people lose confidence in it, disaster could be around the corner.
That little joke he makes – “Reverse Bank of India” instead of “Reserve,” points to a mental concept that could bring the economy of India to its knees.
India Prime Minister Modi Continuing Harmful Demonetisation Policy
In the wake of the unfolding disaster, India’s PM is not reversing course. In fact, he’s going even further – pushing his destructive policy to the limits.
As I said before, this is what happens when massive power is concentrated in the hands of a few politicians. Misguided utopian schemes are having a harmful effect on millions of people.
It’s clear that the way out for India is for Modi to reverse the foolish demonetisation policy, and instead pursue a decentralization policy – empowering the people of India instead of imposing central control over them.