I initially published this blog entry on 16 Nov 2016 then later went back to add comment on it a couple times. It is an action by India that surprises me. It appears to have been planned so poorly that it must have been the immediate response to some extreme crises of great magnitude. A crises where any plan gets chosen as a solution and in haste to solve the crises a failing plan is selected. I see no crises other than than general corruption of the monetary/finance system including counterfeiting that has been a long standing problem in India. I conclude that there is more behind the scenes reason for such an abrupt plan.
India could have devised an extremely better plan to accomplish the currency conversion!
That plan would have been based on its National Identification Number Project. https://en.wikipedia.org/wiki/Aadhaar
"The Unique Identification Authority of India (UIDAI) is a central government agency of India.[4] Its objective is to collect the biometric and demographic data of residents, store them in a centralised database, and issue a 12-digit unique identity number called Aadhaar to each resident.[5][6] It is considered the world's largest national identification number project.[7][8]
https://en.wikipedia.org/wiki/Aadhaar"
This is the Unique Identification Number of India Website: https://uidai.gov.in/beta/
This link looks at both the Currency Conversion Plan and Aadhaar. http://scroll.in/article/821724/how-the-demonetisation-debate-is-similar-to-that-over-aadhar
I am convinced that the only way to establish the base of any Information System Design Model is to uniquely identify each and every granular level entity (person in this Case) that has the attribute of being uniquely different from any other granular lever entity (person for example). Uniquely different as defined by a chosen set of physical biometric markers identifying their physical uniqueness to which any and all exclusive and shared conceptual attributes, methods and means of implementing those methods may be related in an Object Oriented System Design. A simple design based on the collective single entity of "All People" at the top of the system (Nationally or Universally depending on the choice of Problem Domain) and at the very most basic level at the bottom of the structure model: Each and every uniquely identified person in the chosen population domain.
The validity of the system depends on the shared attributes of the CollectiveObject:AllPeople at the top that are inherited by each and every uniquely identified person belonging to the chosen ProblemDomain and the bottom of the ObjectModel structure. It is simply the technological refinement of an old fundamental ObjectModel based on SelfEvidentTruths attributes shared by all people without exclusion. Governance10.1.5........The OperatingSystem and ApplicationPrograms are always in a state of refinement toward a better TopDown and BottomUp system design and operation integration to achieve its intended purpose to ensure........whatever WeThePeople intend it to ensure for each and every unique CitizenPerson.
It is a work in progress. India is evidently well on its way toward a better system by unique identification of each and every citizen. Money is an Object (among the general collection many other TopLevelObjects that each and every citizen interacts with.
Some countries are linking their National ID Cards to their Monetary and Financial Systems by making the same card directly applicable to financial transactions. The National ID Card is a Credit Card. One card used for two fundamental purposes each requiring an biometric identity factor.
http://edition.cnn.com/2014/09/25/business/branding-nigeria-mastercard-backed-i-d-/
This is a dual Washington DC ID that also serves as a financial card for the city transit system. Imagine how much the credit card business would go for this here!
http://octo.dc.gov/page/dc-one-card
https://www.cato.org/publications/congressional-testimony/performance-dc-one-card-program
A logical step in system design?
If India, being well on its way to a Universal National ID had also integrated it with the financial system where everyone with a National ID also had an account for monetary transactions then the way would have been paved for a step toward transition to a fully digital cash system through gradual elimination of physical cash to digital cash in an account.
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My original blog entry and a couple of updates:
Update two days after initial posting of this blog entry:
https://www.sovereignman.com/trends/war-on-cash-intensifies-citibank-to-stop-accepting-cash-at-some-branches-20495/?inf_contact_key=647cc93465349a1bf455d248ad2913271436b2ed0c153e4ef1f0e6cf79b425e2
Tyro, an Australian payments firm: https://tyro.com/
https://en.wikipedia.org/wiki/Tyro_Payments
https://www.fintechlawblog.com/2016/10/a-digital-currency-for-australia/
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Update the next day after initial posting of this blog entry: A closer look at this big Kerfuffle. A word I learned in Australia evidently of British origin and appropriate. http://www.nakedcapitalism.com/2016/11/indias-cash-crackdown-chaos-continues.html If it was to attack the black market it is certain that those in the black market would hire people to stand in line to exchange money as mentioned in comments to the link. Maybe even enforce the fact that those standing in line for a commission on changing black market money in their hands might die if they did not return with exact change. Perhaps some of those standing in line for the second or third time to get more commission were discovered to have short changed someone having black money that dropped a dime on them to one of their fellow black marketers. It is most certainly an organized black market.
Easy to find a specific individual standing in line for hours that short changed or simply kept it all from a previous time standing in line for a commission. Mysterious death while standing in line.
Certainly there is honest actual hardship involved as well a total failure to design and execute a reason plan.
What if the USA was to do the exact same thing? Note that half of all our hundred dollar bills are circulating abroad! Monetary suicide of course. If I was a citizen of India and a big dealer in the black market economy using tons of big bills then I would convert them somehow (backdoor deal with those officially handling the exchange of big bills) to smaller denominations and exchange them for US $100 bills? To what extent are those $100 bills circulating abroad used as black market tax hidden medium of exchange in the same manner as Indian large denomination bills. Not that Rupees in denominations equal to about $7 and $14 US dollars are the target of the big bill exchange.
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Original posting entry:
India is doing this now: Phasing out Big Denomination Currency.
It is being called for in Australia. http://www.macrobusiness.com.au/2016/11/calls-eliminate-large-denomination-bank-notes/
The USA should do it.
Phase out every paper dollar denomination above $1.00!
I believe that more than half of all US hundred dollar notes are circulating abroad.
Paper currency is only 6% of our monetary base? Much or most of it in $100 bills about half of which is not in the country.
All money must be digital and blockchain traceable.
I believe that this about India is not true and planted by special interest to serve a narrow agenda using large untraceable paper currency:
http://thewire.in/79878/governments-demonetisation-shock-hit-poorest/
http://www.bbc.com/news/world-asia-india-37970965
http://www.bbc.com/news/world-asia-india-37947029
I think it logical that the poor do not transact in the large denominations but may have some of them for a store of value that is held onto and not generally spent by them daily/weekly/monthly. Poor people standing in line to change them to smaller denominations will not therefore hurt much unless they put them under the mattress.
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