Indians Turn ‘Black Money’ Into Gold

Many Indians have thwarted a government policy to bring the underground economy out of the shadows by converting their ‘black money’ into gold.
Last fall, the Indian government announced a surprise demonetization policy meant to drive so-called black money out of the shadows, declaring current 1,000 and 500 rupee notes would no longer be valid. The suddenly worthless note notes made up 86% of the currency in circulation in the country at the time. The move made virtually all of the cash in India valueless.
The government policy was meant to force Indians to trade in the old notes for new ones. But there was a catch. The government placed limits on the amount of currency Indians could exchange, but no limits on bank deposits until the end of the year. The idea was to push Indians into putting their hoarded cash in the bank – thus bringing it ‘out of the shadows.’ The demonetization policy resulted in severe cash shortages that persist to this day in some areas of the country.

This post was published at Schiffgold on MAY 8, 2017.