Following India’s Demonetization, UK Follows Suit

16.02.2017 • The Economy

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By Kris Sayce – Port Phillip Insider (Australia) –

Staying in London, it seems central bankers are developing a sense of mischief, or perhaps irony.

As The Mirror headlined recently:

‘The old “round pound” — introduced more than 30 years ago — will cease to be legal tender as the new £1 is dubbed the most secure in the world.’

Ah, the trend of demonetisation continues. Most recently is was India, with its decision to withdraw two denominations of existing banknotes, in order to replace them with a new banknote. The reason? That crooks, drug dealers, money launderers, and tax evaders were the main users of the notes.

By withdrawing them from circulation, it would deal a deathblow to the criminal element. Except it didn’t. Instead, it harmed India’s poorest and most vulnerable people — the poor and underclass who likely wouldn’t even know about the changes. Or, if they did know about the changes, they may not have a clue about how to deal with it.

But following India’s demonetisation, the UK is following suit by withdrawing the existing set of pound coins, and replacing them with a new design, with a new shape, and supposedly with great new security features to eliminate counterfeiting.

We won’t get into the argument about central bank’s being the world’s biggest counterfeiters — OK, we just did. But we will return to the point of the Bank of England’s cruel sense of irony. As The Mirror also reports:

‘The new £1 coin is based on the design of the old 12-sided threepenny bit, which went out of circulation in 1971.’

Interestingly, using the Bank of England’s inflation calculator, one pound today, has the same purchasing power as eight pence in 1971. That’s not a million miles away from the 1971 threepenny bit.

It just goes to show that when it comes to destroying the value of money, the central banks are much more effective at it than the so-called criminal element.

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