How this ban of Rs.500 and Rs.1000 old notes affect the common man…

WHAT HAPPENED NEXT ????

• People who have a lot of cash, legally earned,

will increase bank’s deposits by a huge margin.

• This will also increase the lending activity

because banks have a CRR (cash reserve ratio)

to maintain and with more deposits they can

do more lending.

• People who have illegally earned this money may be

afraid to deposit it in a bank. There are people with

crores of cash, black money, earned through illegal

ways, such as corruption, smuggling etc. And if they

deposit this money in a bank then question will be put

on them that “how did they make this in first place”.

• This will reduce the total currency circulation in the

economy - leading to deflation.

• Deflation increases the value of money that

we have because the total money supply

goes down but the commodities and things

available in the market have not gone down.

• Real Estate would crash slowly and recover

quickly.

• In the end we just want to say that path is truly risky but it will surely help everyone or beneficial over a period of time.

• We just hope the exchange process should be easy so that it will npt affect the common man.

Thankyou

DMCHALLENGER.COM