Narrative will not decide the economy, the rupee will.

Politics is all about creating a narrative that the greatest number of people will share, wrote Prof Ricardo Housmann. So what is Prime Minister Narendra Modi's narrative about the sudden withdrawal of large denomination notes, called demonetization? "There is pain due to my decision, but there is more gain.." This is the old socialist nostrum practiced by all politicians in India. Which is that rich people are all corrupt and if all their money is taken away the poor will become rich with government handouts. "There used to be news about the coal scam, 2G scam...After November 8 announcement you saw what happened." This implies that all corruption has suddenly vanished. Not one of those guilty of all the scams has gone to prison. Yesterday he claimed that it is the beginning of the end for the corrupt. Is it? First Vijay Mallya flew out of Delhi Airport in March with 7 large suitcases and yesterday it was discovered that arms dealer Sanjay Bhandari has left the country, without his passport, which was impounded by the government. Prof Hausmann argues that curtailing corruption does not result in growth of the economy. "Policemen may stop asking for bribes, but that won't make them better at catching criminals and preventing crime," he wrote. Modi underestimated his opponents. Already Rs 12.44 trillion, out of a total of Rs 15.44 trillion, in old currency is back in banks and by 31 December it is expected that very little will be left out. So Modi has changed his tune to making India a 'cashless society'. However, Modi is not the originator of this idea. Prof Rogoff has been going on about banning $100 notes for a long time. German economists have been debating getting rid of cash but the Bundesbank reported that 79% of all transactions in Germany in 2014 was in cash. One economist, Lars Feld said that cash is "printed freedom" and without it governments will have total control over citizens. Elaine Ou writes that becoming cashless means that banks have the power to refuse a transaction, giving them control over our money. According to the UK government banks are the highest risk of money laundering, with a grade of 158, accountancy service providers are second, with a grade of 90, cash is third with 88 and legal service providers come fourth with 84. Which means that accountants and lawyers combined are double the danger of cash. Indian economists are either politically biased or paid. An editorial in the Mint says that lack of cash has no danger for the economy. After all, the British economy has not collapsed with Brexit, as some predicted. False. All that has happened is that people have voted to leave the EU. The process will start when Prime Minister Theresa May triggers Article 50. Already the British pound has fallen 17% against the rupee. What happens to the rupee when Donald Trump comes in will decide our fate. The omens do not look good.