{"id":15236,"date":"2015-12-13T19:41:45","date_gmt":"2015-12-14T00:41:45","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15236"},"modified":"2015-12-13T19:41:45","modified_gmt":"2015-12-14T00:41:45","slug":"indias-failing-gold-monetization-scheme-seizure-imminent","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15236","title":{"rendered":"India\u2019s Failing Gold Monetization Scheme: Seizure Imminent?"},"content":{"rendered":"

India\u2019s Failing Gold Monetization Scheme: Seizure Imminent?<\/a>\"\"<\/h3>\n
India\u2019s newest\u00a0gold monetization scheme<\/a>\u00a0has been a colossal failure. After one month, it has netted only one kilogram (2.2 pounds\u00a0avoirdupois<\/a>) out of an estimated 20,000\u00a0tonnes<\/span>\u00a0(44 million pounds\u00a0avdp<\/span>) of privately-held gold. Why is that? Well, let\u2019s look at how the program works.<\/div>\n
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  1. Gold-holders turn their gold over to a bank. The banks melt the metal down and provide it to the central bank to loan to\u00a0jewellers<\/span>.<\/li>\n
  2. In exchange, the central bank provides gold accounts to the banks on behalf of the gold depositors and pays interest on those deposits.<\/li>\n
  3. The interest rate on those deposits is a little over 2%, while the inflation rate in India right now is over 5%.<\/li>\n
  4. The deposits are time deposits, meaning that depositors receive their principal repaid at the end of the term; short-term depositors\u00a0receive gold or rupees back<\/a>, while medium- and long-term depositors receive only rupees.<\/li>\n<\/ol>\n

    So you give up all your gold, get at most a -3% rate of return on your investment, and might get both your interest payments and principal paid in rupees that the government has historically devalued at up to\u00a015% per year<\/a>. And the government wonders why gold-holders aren\u2019t flocking to offload their gold?<\/p>\n

    But not to worry, the government will\u00a0make sure this scheme works<\/a>:<\/p>\n

    \u201cA finance ministry official said if banks fail to win over temples, the government could intervene directly as it is looking for a big boost to the scheme to keep both imports and the current account deficit under control.\u201d<\/p><\/blockquote>\n

    Shades of 1933<\/a>\u00a0all over again. One would imagine that outright gold confiscation from Hindu temples would result in massive protests and quite a bit of bloodshed. And while most rational people would assume that the government would be smart enough to avoid doing something so drastically stupid, this is the same government that developed the cockamamie gold monetization scheme in the first place. Never underestimate the idiocy of government bureaucrats, especially when those bureaucrats are trying to save face.<\/p>\n

    …click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    India\u2019s Failing Gold Monetization Scheme: Seizure Imminent? India\u2019s newest\u00a0gold monetization scheme\u00a0has been a colossal failure. After one month, it has netted only one kilogram (2.2 pounds\u00a0avoirdupois) out of an estimated 20,000\u00a0tonnes\u00a0(44 million pounds\u00a0avdp) of privately-held gold. Why is that? Well, let\u2019s look at how the program works. Gold-holders turn their gold over to a bank. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,6],"tags":[63,374,8687,10256,422,7617],"class_list":["post-15236","post","type-post","status-publish","format-standard","hentry","category-economics","category-liberty","tag-banks","tag-gold","tag-gold-confiscation","tag-gold-monetization","tag-india","tag-mises-institute"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15236","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15236"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15236\/revisions"}],"predecessor-version":[{"id":15237,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15236\/revisions\/15237"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15236"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15236"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}