- India’s glide path to “Modi Bucks”
- The largest democracy in the world…
- … declares war on cash (Cashless or “less-cash”?)
- A sweeping assault on privacy, free speech
- Chris Campbell on a “cohesive” crypto industry… An electricity blackout workaround… A little light beer levity… And more!
If you want a grim glimpse into the future “Biden Bucks” would bring about… look no further than India.
If you’re a newer reader — someone who came into the Paradigm Press fold after encountering Jim Rickards’ “Biden Bucks” thesis last year — all of this will likely be new to you.
And if you’ve been with us a while longer, there are new developments.
Either way, strap in for a wild ride today…
On Nov. 8, 2016, India’s prime minister Narendra Modi fired a devastating barrage in the global War on Cash.
He immediately banned all of the 500- and 1,000-rupee notes in circulation — which translated roughly to $7.50 and $15.
They were the highest-denomination paper money in India, making up 85% of all the cash in circulation. By Modi’s decree, they were no longer legal tender; Indians had to take them to a bank before year-end to be deposited in a digital account or traded for new higher-denomination notes.
The ATMs were shut down for the day. Withdrawal limits were in effect during the following days. Isolated riots broke out.
At the outset, Modi’s finance minister said the move was aimed at rooting out tax evasion in an overwhelmingly cash-based economy.
But a few weeks later, Modi came clean: “It’s correct that a 100% cashless society is not possible [now]. But why don’t we make a beginning for a less-cash society in India? We can gradually move from a less-cash society to a cashless society.”
Hundreds of millions of people who heretofore transacted only in cash were being dragged kicking and screaming into the electronic age — where transactions are more easily tracked and taxed.
Narendra Modi, counting all the ways he loves his “less-cash” society…
Make no mistake, this regimen of shock therapy was largely made in America — as the respected German business journalist Norbert Haering soon discovered.
In January 2017, Haering unearthed documentary evidence that the U.S. Agency for International Development hatched this scheme along with the Indian Ministry of Finance.
Also in on the machinations were Visa, Mastercard, the Gates Foundation (are you surprised?) and the World Economic Forum (natch). Together, they sprung this enormous experiment on 1.25 billion human guinea pigs.
Fast-forward six years and the experiment finally made its way last week to the front page of The New York Times.
As you might imagine, it was described almost entirely in glowing terms…
Look closely at the lower-left corner of that photo: Millions upon millions of India’s street vendors now display QR codes with which people can transact using low-end smartphones.
“Billions of mobile app transactions — a volume dwarfing anything in the West — course each month through a homegrown digital network that has made business easier and brought large numbers of Indians into the formal economy,” the NYT enthuses.
“Digital payments are being made for even the smallest of transactions, with nearly 50% classified as small or micro payments: 10 cents for a cup of milk chai or $2 for a bag of fresh vegetables.”
Modi crowed about it last week at the G20 summit held in New Delhi. “Our digital payments ecosystem has been developed as a free public good.”
The digital payments go hand-in-hand with a digital ID scheme launched in 2010 called Aadhaar.
That year, the Indian government started building a database comprising its citizens’ personal details — names, addresses, dates of birth, mobile phone numbers, etc. — along with all 10 fingerprints and iris scans.
Bill Gates — here he shows up again — marveled at how Aadhaar was “something that had never been done by any government before, not even in a rich country.”
Aadhaar was touted as “voluntary.” But by 2017, a year after Modi’s decree, it was nearly impossible for Indians to get a bank account or a mobile phone or health insurance if they weren’t in the Aadhaar database. By now, the NYT says 99% of adults are in the system.
What the NYT won’t tell you is that the database could be hacked with trivial effort: In early 2018, we related how an Indian newspaper paid hackers a mere $8 to get a username and password allowing access to Aadhaar. “Lo and behold,” wrote reporter Rachna Khaira, “you could enter any Aadhaar number in the portal, and instantly get all particulars that an individual may have submitted.”
No matter: “Reliance on the digital infrastructure deepened during the pandemic,” the Times goes on, “as the government used the ID numbers to manage the world’s largest vaccination drive and deliver financial aid.”
The NYT gives lip service to privacy concerns: “Some worry that the sharp erosion of checks on government power under the strongman rule of Mr. Modi could open the door to abuses of the central identity database. With India pushing its model abroad, including in countries lacking strong legal safeguards, these concerns will follow.”
But if this auto-rickshaw driver in Delhi is any indication, Indians are welcoming their new digital fetters: “I used to prefer cash,” says Rajesh Kumar Srivastva. “But I learned the benefits of this during the lockdown.”
Also left out of the NYT story is this: Since Modi’s cash decree in 2016, India has led the world in shutting down the internet to suppress dissent — and, of course, disrupting digital payments along the way.
A nonprofit group called Access Now finds that India accounts for 58% of all the internet shutdowns in its database going back the last seven years.
Last year alone, “the world’s biggest democracy” temporarily shut down the internet somewhere in its territory 84 times. No one else came close. Not even war-torn Ukraine (22 times), an increasingly authoritarian Iran (18) or Myanmar’s revived military dictatorship (7).
And that 2022 total is likely a lowball estimate, owing to “the central government’s refusal to document and publish shutdown orders,” says Access Now’s report. “Legal challenges against shutdowns, fewer mass protests in the aftermath of the COVID-19 pandemic and the sustained and increasing crackdown on dissent may have increased administrative friction or reduced the incentives for authorities to impose shutdowns.”
Modi’s government has pulled all of this off without a central bank digital currency. Imagine the turnkey tyranny that a CBDC would make possible.
Which brings us back to the United States… and the next phase of “Biden Bucks.”
This Thursday will mark one year to the day since Joe Biden signed Executive Order 14067 — paving the way for an American CBDC (even if the corporate media would like you to believe otherwise).
Millions of Americans know about this executive order and its implications after Paradigm Press macro maven Jim Rickards started sounding the alarm last summer.
I just got a note from Jim yesterday: “The final countdown to the nationwide rollout of Biden Bucks has now begun.” He expects a joint announcement from the White House and the big banks on or around March 15 — a week from tomorrow.
Jim is still in the process of gathering all the necessary information so you can act on it. Rest assured we’ll be following up in The 5 as the week goes on.
If Mr. Market is supposed to be throwing a snit at Federal Reserve chair Jerome Powell’s testimony to Congress… it’s not much of a snit.
“The latest economic data have come in stronger than expected,” Powell told the Senate Banking Committee,” which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated.”
And with that, the trade in fed funds futures now suggests a 66% likelihood the Fed will jack up short-term rates by a half-percentage point at its next meeting two weeks from tomorrow — not a quarter point. That would bring the fed funds rate to 5.25%.
The “terminal rate” — the rate at which the Fed would finally stop raising — is now projected at 5.75%, a level so far unseen since the start of the 21st century.
But go figure, the Nasdaq — the index whose component companies are most sensitive to rising interest rates — is down a mere third of a percent, to 11,633.
It’s the other indexes taking a bigger spill — but even so, nothing horrendous. The S&P 500 is down close to 1%, but still holding the line on the 4,000 level. The Dow is down 1%, still above 33,000. Bond yields are little changed from where they were 24 hours ago, the 10-year Treasury at 3.96%.
But the powers that be took Powell’s testimony as an opportunity to smack the precious metals again. Gold is off $26 to $1,820… and silver is only 21 cents away from breaking below $20.
Oil is down huge, over 3%, back below $78. West Texas Intermediate crude remains stuck in a $72–82 range that’s held since late November.
Crypto is quiet, Bitcoin at $22,340 and Ethereum at $1,562.
“There’s a cohesiveness to the crypto industry I haven’t seen before,” says Paradigm crypto analyst Chris Campbell, sifting through his notes from the now-concluded ETHDenver conference.
“While attendance was only about 5,000 last year,” he tells us, “this year, about 20,000 Ethereum holders converged upon what one attendee I met in my hotel called ‘a giant horse barn with bad WiFi.’”
(As it happens the venue had just hosted the Rocky Mountain Horse Expo. Heh…)
Chris was struck by the attendees’ nonchalant attitude toward Securities and Exchange Commission chair Gary Gensler’s jihad against crypto. “Regulators, they say, have tried — and failed — to slow down crypto. Where they have succeeded most is increasing crypto’s resilience.
“One obvious example is Bitcoin mining. While many pundits predicted that China’s mining crackdown spelled doom for Bitcoin, the opposite happened: Bitcoin decentralized further and emerged stronger.
“That said,” Chris allows, “there’s a sense of pessimism in the short term. ‘The first thing we tell new projects,’ one crypto lawyer told me, ‘is that, if you can, avoid launching in the United States.’”
“To your reader who asked, ‘What about no electric/internet?’ in regard to crypto ownership,” begins today’s mailbag, “I would point out you can handle literally all crypto transactions on a smartphone.”
[To be clear, the reader was concerned about a CBDC, not crypto. But go on…]
“You can keep that phone charged using a solar power adapter ($20 on Amazon) and access the internet using a portable hotspot ($150 on Amazon), which you can also keep charged using the same solar-powered charger you use with your phone.
“And if you are seriously concerned about losing power and internet, those two items should be a top-priority purchase regardless of whether you own crypto. I’m no survivalist, but I do live in Florida where our annual hurricane visits make both items must-haves. I imagine the Tornado Alley folks feel much the same way.”
The 5: When you say “hotspot” do you mean a device that gives you data access via a cell tower, like the Verizon Jetpack? That’s great as long as the cell tower is functioning (and you don’t mind paying for data access on top of your usual mobile bill).
Or do you mean a mesh network? Those are great — assuming there are enough like-minded folks in your community who’ve got the same thing, and assuming one of them has access to a functioning cell tower or broadband connection.
Neither is a fail-safe. Or do I misunderstand?
And if the authorities decide to just take down the internet India-style… well, you’re SOL.
Still more light beer humor from our readers to wrap things up today…
“Regarding light beer not tasting like water: Light beer in my family is often referred to as ‘two lovers in a canoe’ — in other words, ’effing close to water!”
“Up in Canada,” says our final correspondent, “light beers are frequently referred to as ‘trainers.’”
The 5: On a related topic… nearly a decade after I raised the issue in this e-letter, I still don’t know for sure whether the Molson sold in Canada is different from the Molson sold stateside!
The 5 Min. Forecast