The Currency Crisis In India Seeking Alpha Predicted Is Here

This article was submitted by Shubhendu Pathak, a finance professional working in the Bay Area. Past: Capital One Shubhendu earned his Bachelors (B. Tech) and Masters (M. Tech) from IIT Delhi, and MBA with a concentration in Finance from Emory University.
Seeking Alpha published my two articles Will India Be The First Domino To Fall?and You Can’t Just Invest On Hope in which I predicted a currency crisis in India. On November 08, 2016, Prime Minister Narendra Modi announced the demonetization of 500 ($7.5) and 1,000 ($15) rupee notes, which constitute more than 85% of the currency in circulation. These notes ceased to exist as legal tenders on the night of the announcement. People can deposit them in their bank accounts before December 30, but cannot withdraw more than $350 in a week.
The purported object behind this step is to get rid of high denomination currency notes that the government believes are hoarded by tax evaders and corrupt government bureaucrats. This might be a little difficult to digest for an economist. For one, the corrupt might not be smart but they are not nave to simply sit on piles of cash that don’t yield any return; it doesn’t take a rocket scientist to diversify. Secondly, there is a simpler explanation that an economist might relate to better, and which is backed by data (read my two articles); the government run banks in India have run out of money and this is a bank holiday.
Here is an excerpt from my first article published on August 17, 2015.
The crisis has begun and there are only two ways forward for the banks; they can either take money printing to yet another level or announce a bank holiday and force the depositors to take a haircut on their deposits.

This post was published at Schiffgold on DECEMBER 7, 2016.