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Jayant Bhandari

Jayant Bhandari

Jayant Bhandari grew up in India. He advises institutional investors on investing in the junior mining industry. He writes on political, economic and cultural issues for several publications. He is a contributing editor of the Liberty magazine. He runs a yearly seminar in Vancouver titled Capitalism & Morality.

Articles by Jayant Bhandari

Canada: Risks of a Parliamentary Democracy

17 days ago

A Vulnerable System
Parliamentary democracy is vulnerable to the extremely dangerous possibility that someone with very little voter support can rise to the top layer of government. All one apparently has to do is to be enough of a populist to get elected by ghetto dwellers.
 
Economist and philosopher Hans-Hermann Hoppe dissects democracy in his book Democracy, the God that Failed, which shines a light on the system’s grave deficiencies with respect to guarding liberty. As Hoppe puts it: “Democracy has nothing to do with freedom. Democracy is a soft variant of communism, and rarely in the history of ideas has it been taken for anything else.” At first glance this may strike many people as an exaggeration, but considering the trends that have emerged over the past several decades, it

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India: The Genie of Lawlessness is out of the Bottle

September 20, 2017

Recapitulation (Part XVI, the Last)
Since the announcement of demonetization of Indian currency on 8th November 2016, I have written a large number of articles. The issue is not so much that the Indian Prime Minister, Narendra Modi, is a tyrant and extremely simplistic in his thinking (which he is), or that demonetization and the new sales tax system were horribly ill-conceived (which they were). Time erases all tyrants from the map, and eventually from people’s memory.
 
According to the Global Slavery Index, an estimated 18 million Indians, equivalent to half the total population of Canada, are bonded, modern slaves.
Photo via patrika.com
 

My interest has been mostly to use these events to document the underlying causes of such utter missteps, which technically must be called stupid,

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The Future of the Third World

August 19, 2017

Decolonization
The British Empire was the largest in history. At the end of World War II Britain had to start pulling out from its colonies. A major part of the reason was, ironically, the economic prosperity that had come through industrialization, massive improvements in transportation, and the advent of telecommunications, ethnic and religious respect, freedom of speech, and other liberties offered by the empire.

The colors represent the colonies of various nations in 1945, and the colonial borders of that time – click to enlarge.
 

After the departure of the British — as well as the French, German, Belgians, and other European colonizers — most of the newly “independent” countries suffered rapid decay in their institutions, stagnant economies, massive social strife, and a fall in

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The Myth of India’s Information Technology Industry

July 26, 2017

A Shift in Perception – Indians in Silicon Valley
When I was studying in the UK in early 90s, I was often asked about cows, elephants and snake-charmers on the roads in India.  A shift in public perception— not in the associated reality — was however starting to happen. India would soon become known for its vibrant IT industry.
 
Friends and family are helping students taking university exams with cheating. 2.5 million candidates, many of them with PhDs or post-graduates, recently applied for 6,000 of the lowest level job positions (“grade D”) available in West Bengal, which require no more than an early-stage school education. While India produces the largest number of PhDs, engineers, etc. in the world, the educational system is in reality in a shambles and a complete joke. Most of

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India: The Lunatics Have Taken Over the Asylum

July 21, 2017

Goods and Services Tax, and Gold (Part XV)
Below is a scene from anti-GST protests by traders in the Indian city of Surat. On 1st  July 2017, India changed the way it imposes indirect taxes. As a result, there has been massive chaos around the country. Many businesses are closed for they don’t know what taxes apply to them, or how to do the paperwork. Factories are shut, and businesses are protesting.
 

A massive anti-GST protest in Surat  [PT]
 

Increases in administrative costs have made economics of trading and manufacturing unfavorable for many. Most lack access to accounting and IT skills to implement the new system — India simply does not have that many skilled people. As many as half of all transportation trucks are not operating. The media have “decided” not to cover the

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India: Cash is Back

July 2, 2017

But the Crisis has Deepened and has Become More Entrenched (Part XIV)
 
Nobody for President
On 17th July 2017, India will elect a new President through a vote of the elected representatives. The two real choices are between Ram Nath Kovind and Meira Kumar. Afraid of looking completely ignorant, I asked a few people who Kovind is. No-one knew of him and people only vaguely remembered Ms. Kumar.
 
Adults and juveniles have been arrested in different parts of India for celebrating Pakistan’s victory over India in a recently held cricket match. They have been charged with sedition, a charge that has serious legal ramifications and can potentially send these people to prison for life. With the British gone for 70 years, India’s laws and institutions have lost all mooring to their rational

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India: Why its Attempt to Go Digital Will Fail

May 20, 2017

India Reverts to its Irrational, Tribal Normal (Part XIII)
Over the three years in which Narendra Modi has been in power, his support base has continued to increase. Indian institutions — including the courts and the media — now toe his line.
The President, otherwise a ceremonial rubber-stamp post, but the last obstacle keeping Modi from implementing a police state, comes up for re-election by a vote of the legislative houses in July 2017.  No one should be surprised if a Hindu fanatic is made the next President. India is rapidly entering a new phase.
 
Indian Prime Minister, Narendra Modi on the cover of an Indian magazine in 2002, when he was the Chief Minister of the Indian province of Gujarat. During his reign in Gujarat, a civil-war like situation erupted, which seriously segregated

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India – Is Kashmir Gone?

April 21, 2017

Everything Gets Worse  (Part XII) –  Pakistan vs. India
After 70 years of so-called independence, one has to be a professional victim not to look within oneself for the reasons for starvation, unnatural deaths, utter backwardness, drudgery, disease, and misery in India.
Intellectual capital accumulated in the West over the last 2,500 years — available for free in real-time via the internet — can be downloaded by a passionate learner. In the age of modern technology, another mostly free gift from the West which has significantly leveled the playing field, societies that wanted economic convergence with the West, such as Japan, Korea, Singapore, HK, China, etc., have either achieved it rapidly, or have strongly trended toward it.
 
More than 28,000 children less than six years of age have died in just one province, Madhya Pradesh, over the past year. Because these deaths were due to diseases resulting from malnourishment, the government attributed every single death to disease rather than malnourishment.
Photo credit: Hemender Sharma, India Today
 

Given that Indian prime minister Narendra Modi has been at the helm for only three years, it is hard to blame him in general for any of the above mentioned monstrosities marring daily life in India.

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India: The next Pakistan?

March 23, 2017

India’s Rapid Degradation
This is Part XI of a series of articles (the most recent of which is linked here) in which I have provided regular updates on what started as the demonetization of 86% of India’s currency. The story of demonetization and the ensuing developments were merely a vehicle for me to explore Indian institutions, culture and society.
 
The Modimobile is making the rounds amid a flower shower. [PT]
Photo credit: PTI Photo
 

Tribal cultures face an inherent contradiction. They create poison from within to grow more collectivist, controlling and tyrannical — members of the populace looks for nannies, and they readily find sociopaths to exploit that need. Their lack of organizational skills, their inability to engage in economic calculation and their irrationality lead to massive internal stresses and the ultimate devolution of such an unnatural society.
India finds itself in a situation where it is grasping for more totalitarianism to solve the problems that totalitarianism created. The demonetization exercise was an assertion of India’s underlying tribal and collectivist culture.
 
Demonetization Pain Continues
Cashless ATMs continue to be the new normal in India. In a recent conversation, economist Professor Madhusudan Raj mentioned that as many as 70% of the ATMs in his city are still not operational. The situation in villages and small towns is much worse.

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India: Still the Fastest Growing Large Economy?

March 7, 2017

India’s Currency Ban – Part X
It has now been four months since Narendra Modi declared about 86% of monetary value of currency illegal. Linked here is the last in my series of updates, which was written soon after the deadline to deposit the demonetized currency. Most of the banned currency was eventually deposited, making a mockery of Modi, who had claimed that unaccounted money would not reach the banks.  Perhaps 3% of the cash never reached the banks.
 
A cunning plan unravels
Cartoon by Sandeep Adhwaryu
 

Those living outside India still have the option to return to the country, complete a number of formalities at the airport, and then hope that India’s central bank, the Reserve Bank of India (RBI) will do the conversion.
Many of these people are unfortunately return empty-handed. In India, where stamps, signatures of bureaucrats, file-passing, attesting of documents, etc. go with everything, a lot of submitted paperwork is deemed incomplete by the RBI.
 
India’s narrow money supply M1 has collapsed from 28.42 trillion rupees in September of 2016 to just slightly above 20 trillion rupees in December. This makes recently reported GDP growth data (see further below) particularly dubious – click to enlarge.
 
Modi never intended to hurt Indians who are living abroad, but in the utter chaos of India, he can merely wave his magic wand and hope.

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India: The World’s Fastest Growing Large Economy?

February 2, 2017

Popular Narrative
India has been the world’s favorite country for the last three years. It is believed to have superseded China as the world’s fastest growing large economy. India is expected to grow at 7.5%. Compare that to the mere 6.3% growth that China has “fallen” to.
 
India’s quarterly annualized GDP growth rate since 2008, according to MOSPI (statistics ministry) – click to enlarge.
 

The IMF, the World Bank, and the international media have celebrated this event. Declining commodity prices and other problems in Russia, Brazil and South Africa have damaged the prospects of the BRICs (ex-India) and other emerging markets.
Commodity and currency markets have been very turbulent, and the Arab Spring has not only failed to keep up its pace, it has half-destroyed the Middle East, with fires raging in Syria, Turkey, Libya, etc. Migrant problems in Europe and the uncertain future of the US — as per the current narrative — leave India as the prime candidate to prop up global economic growth.
It seems to be deeply emotionally satisfying to finally see the world’s largest democracy supersede the “communist dictatorship” of China. India’s GDP has also just surpassed that of the UK, its former colonial master. The world is looking toward India as a beacon for the future of humanity. Again, that seems to be the narrative.

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India – On a Downward Spiral

January 23, 2017
India – On a Downward Spiral

India’s Currency Ban – Part IX
India’s Prime Minister Narendra Modi announced on 8th  November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender.
 
Sadly, the despondency visible in the old man’s facial expression has become a widespread phenomenon since the currency ban, particularly among India’s poor
Photo credit: Aayush Goel
 

Here are links to Part-I, Part-II, Part-III, Part-IV, Part-V, Part-VI, Part-VII, and Part-VIII, which not only provide updates on the demonetization saga, but explore and dissect India’s culture and why in this country of 1.34 billion — more than 1 out of every 6 human beings on the planet — so many exist in wretched poverty in this modern age, in an insect-like existence.
 

People storming a bank. If this is not an insect-like existence, what is it?
 
Oppression, exploitation, extreme stress, and the resulting millions of untimely deaths every year possibly make the story of the post-independent India one of the biggest crimes against humanity. Alas,it is getting worse.
As I explored in earlier updates, Indian institutions were designed to be run by the British. With them no longer at the helm, these institutions have mutated over the last 70 years to accommodate the underlying irrationality, tribalism, and superstitions of India. They have slowly but surely crumbled away, decaying and becoming degraded.

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Modi’s Great Leap Forward

January 1, 2017
Modi’s Great Leap Forward

India’s Currency Ban – Part VIII
India’s Prime Minister, Narendra Modi, announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender. Linked are Part-I, Part-II, Part-III, Part-IV, Part-V, Part-VI and Part-VII, which provide updates on the demonetization saga and how Modi is acting as a catalyst to hasten the rapid degradation of India and what remains of its institutions.
 
India’s Pride and Joy
 
Indians are celebrating that their economy has surpassed that of India’s former colonial master, the UK.
 

So-called educated Indians have latched on to the above visual, with full support of the Indian government. It has been shared far and wide in the national media. When you remind them that India’s population is twenty-one times that of the UK and on top of that, the British pound has taken a huge pounding because of Brexit and associated fear in the financial markets, expect to be ignored. You will be seen as anti-Indian.
Given the underlying irrationality and tribalism of India (read earlier updates for more on this), selected numbers are used to rationalize feelings and emotions. You see this everywhere in India: Science — very ironically — is used as a tool to rationalize superstitions and irrationalities.

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Modi’s Fantastic Promises

December 19, 2016
Modi’s Fantastic Promises

India’s Currency Ban, Part VII
This article continues right where Part VI left off (for earlier updates on the demonetization saga see Part-I, Part-II, Part-III, Part-IV, and Part-V).
There is still huge support for Modi even among the poor.  A big carrot is dangled before them, which makes many stay numb to their current suffering.  During his election campaign in 2014, Modi promised to deposit more than Rs 1.5 million (~$22,000) in each poor person’s account once the government had seized all black money.
 
Massive problems have been reported with the new bills. Some have been printed on defective paper and are simply falling apart. The inferior quality of the print job is generally often on the appalling side of deplorable. The new notes are counterfeited with great abandon, quite likely to a much greater extent than they ever were in the past. So much for Modi’s plan to stop counterfeiting.
Photo credit: The Hindu
 

How he arrived at this fantastic figure is anyone’s guess. But given India’s GDP of $1,718 per capita, Modi has promised to deposit 1,300% of annual GDP in individual bank accounts. The total amount would be larger than the entire GDP of the US. Evidently, this does not even remotely add up.
So what is really motivating the anti-corruption feelings of so many Indians — including the salaried middle class —  simply seems to be a mixture of greed and envy.

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India’s Rapid Progression Toward a Police State

December 19, 2016
India’s Rapid Progression Toward a Police State

India’s Currency Ban – Part VI
India’s Prime Minister, Narendra Modi, announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender. Linked are Part-I, Part-II, Part-III, Part-IV, and Part-V, which provide updates on the demonetization saga and how Modi is acting as a catalyst to hasten the rapid degradation of India and what remains of its institutions.
 
There are undoubtedly many differences between the two gentlemen depicted above, but both appear to have mastered the age-old trick of extending one’s grip on political power by inflicting chaos.
 

As the deadline of 31st  December 2016 approaches, Gresham’s law has been turned upside down. When they needed to be converted, the banned currency notes were trading for a 20% discount to their face value. In the meantime, the discount has disappeared and the banned notes are trading at a premium of 10%. The mafia which deals in the banned notes could not possibly be happier — it promises to be a big supporter of Modi going forward.
 

See if you can spot a rich person here. Rich and connected people, if they really needed to exchange banknotes, used the mafia (which employed millions of poor people to queue at banks), police (who used ID copies of old prisoners) or banks (who simply swapped the currency notes). It is the desperately poor people who have suffered.

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Gold Price Skyrockets in India after Currency Ban – Part V

December 5, 2016
Gold Price Skyrockets in India after Currency Ban – Part V

A Brief Recap
India’s Prime Minister announced on 8th November 2016 that Rs 500 and Rs 1,000 banknotes will no longer be legal tender. Linked are Part-I, Part-II, Part-III, and Part-IV, which provide updates on the rapidly encroaching police state
Expect a continuation of new social engineering notifications, each sabotaging wealth-creation, confiscating people’s wealth, and tyrannizing those who refuse to be a part of the herd, in the process destroying the very backbone of the economy and civilization.
There are clear signs that in a very convoluted way, possession of gold for investment purposes will be made illegal. Expect capital controls to follow. Chaos from people’s inability to access the money in their bank accounts is now spreading to the people who have so far been unaffected: the middle class.
This is a completely unnecessary man-made disaster, with the single aim of glorifying  Narendra Modi.
 

Indian prime minister Narendra Modi
Photo credit: Reuters
 

Fracturing Institutions
Several petitions in various courts across India were immediately filed against the central bank, the Reserve Bank of India (RBI), for repudiating its IOU obligation which the currency bills represent, after Modi’s announcement on 8th November.

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Gold Price Skyrockets in India after Currency Ban – Part IV

November 30, 2016
Gold Price Skyrockets in India after Currency Ban – Part IV

A Market Gripped by Fear
The Indian Prime Minister announced on 8th November 2016 that Rs 500 and Rs 1,000 banknotes would no longer be legal tender. Linked are Part-I, Part-II and Part-III updates on the rapidly encroaching police state.
The economic and social mess that Modi has created is unprecedented. It will go down in history as an epitome of naivety and arrogance due to Modi’s self-centered desire to increase tax-collection at any cost.
 
Indian jewelry merchant
Photo via indiatimes.com
 

Fear has gripped the bullion market, for one is deemed to be guilty until proven otherwise. People with perfectly legal cash are afraid of cameras recording their purchases and having to pay outrageous bribes. After an adjustment period people will buy more — not less — gold. For now, the gold market has gone mostly underground with the gold price hovering around US$1,700 per ounce. Did Modi want to boost the informal economy?
 
The Cultural and Political Undercurrent
The individual has been reduced to a cog in a big machine that exists in Modi’s imagination. The country is expected to rally behind him, for his glory.  The IMF is going along with Modi, for in their simplistic view, enforcing western-style institutions on India will lead to the replication of western economic development and the rule of law in India.

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Gold Price Skyrockets in India after Currency Ban – Part III

November 24, 2016
Gold Price Skyrockets in India after Currency Ban – Part III

When Money Dies
In part-I of the dispatch we talked about what happened during the first two days after Indian Prime Minister, Narendra Modi banned Rs 500 and Rs 1000 banknotes, comprising of 88% of the monetary value of cash in circulation. In part-II, we talked about the scenes, chaos, desperation, and massive loss of productive capacity that this ban had led to over the next few days.
 
Indian prime minister Narendra Modi – another finger-wagger, as can be seen in this photograph. Beware finger-wagging politicians, as we always point out. Modi now plans to impose income tax penalties on large bank deposits; the State’s rapaciousness knows no bounds and evidently the mere possession of some arbitrary amount of money considered “too large” now means one is deemed a criminal a priori in India. It goes without saying that the concept of property rights is alien to Modi. [PT]
Photo via indianexpress.com
 

Now, two weeks later, the situation is getting much worse, and more desperate. It is obvious that Modi single-handedly took the decision to ban the banknotes, with most people in his cabinet and virtually all in the central bank oblivious to his plan.
There is virtually no visible opposition to the enforced ban, for any politician who opposes the ban risks having his own misdeeds — and they are all corrupt — brought to the public space by Modi.

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Gold Price Skyrockets in India after Currency Ban – Part II

November 16, 2016
Gold Price Skyrockets in India after Currency Ban – Part II

Chaos in the Wake of the Ban
Here is a link to Part 1, about what happened in the first two days after India’s government made Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes illegal. They can now only be converted to Rs 100 (~$1.50) or lower denomination notes, at bank branches or post offices. Banks were closed the first day after the decision. What follows is the crux of what has happened over the subsequent four days.
 
  India’s prime minister Nahendra Modi, author of the recent overnight currency ban
Photo credit: indiatimes.com
 

Today India is on the verge of a major social-political crisis, unless either the government backs off from the decision of banning the currency or some real magic happens. There is chaos in the streets and daily life is slowly but surely coming to a full halt.
What Modi did was not only heavy-handed, hugely arrogant, and of no value, it has been very badly implemented to boot — as everything in India always is — and carries the real potential of escalating and snowballing into something horrific.

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Gold Price Skyrockets in India after Currency Ban

November 9, 2016

India’s Government Makes Banknotes Worthless by Decree Overnight
As I write this in the morning of 9th November 2016, there are huge lines forming outside gold shops in India — and gold traded heavily until late into the night yesterday. Depending on who you ask, the retail price of gold has gone up between 15% and 20% within the last 10 hours.
 
Gold quotes in India – gold traded for as much as Rs 49,000 per 10 grams or US$ 2,294 per ounce
 

At some places, it was sold for as much as US$ 2,294 per ounce. That is, if you can actually find physical gold — gold inventories at stores are rapidly depleting. All of this happened well before the international price started to move up because of the election results coming out of the US.
Last night (8th November 2016), India’s government banned the use of Rs 500 (~$7.50) and Rs 1,000 ($15) banknotes. This pretty much made most currency-in-use illegal. Banks and ATMs are closed today. The government believes that doing this will help eradicate corruption and push counterfeit money out of circulation. According to the Indian government, the counterfeit money tends to come from Pakistan and helps finance terrorism.
My first instinct when I heard the news was that people would be on the streets this morning. There would be riots and the Indian Prime Minister, Narendra Modi, would be unceremoniously thrown out.

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The Myth of Leverage

August 23, 2016

Mining Stocks, Gold Prices and Commodity Price Trends
Gold has gone up >400% over the last 16 years. Ironically, it is hard to find a gold mining equity exhibiting similar performance. In retrospect, if one invested in gold, one not only made much better returns, one also took a relatively insignificant risk in comparison to owning equities—equities can go to zero while it is hard for a commodity to fall much below its cost of production. Moreover, depending on the jurisdiction, owning gold might have resulted in lower (or no) tax liabilities.
 
South Deep gold mine in South Africa
Photo via mining.com
 

I am often amused when investors talk about leverage that mining equities offer— a large proportion of investors in the mining sector are driven by this, a sort of casino mentality. As experience over the last 16 years shows, leverage has been a myth and has actually been negative. In their chase for leverage, investors missed out on value-investing and profiting from wealth-creation.  Let’s dissect this.
As you can see in the following three graphs, there is often a very close correlation between the prices of commodities. When a particular commodity goes up in price, other commodities go up as well. When the price of a certain metal increases, the cost of its production increases as well, as a consequence of the prices of commodities (iron, oil, etc.

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Gold and Brexit

June 20, 2016

Going Up for the Wrong Reason
Gold is soaring. It should—and a lot—but in my view not for the reason it is. Indeed gold is insurance for uncertain times, a time that Brexit seems to represent. But insurance is an administrative cost — one must minimize its use.
 
August gold contract, daily – gold has been strong of late, but this seems to be driven by “Brexit” fears – click to enlarge.
 

Moreover, insuring against Brexit might ironically be equivalent to insuring against a good event.
The market believes that Brexit will lead to wealth-destruction (based on its statist views, in which those running our institutions are omniscient, when they actually are quite naive, incompetent, and incapable of understanding the concept of complexity).
Austrian Economics knows (“knows” because Austrian Economics is the only real economics) that Brexit will actually aid wealth-creation, by reducing the impact of European bureaucracy on the UK.
Brexit will also enable more control over migration into the UK. While in an ideal world, I would want free movement of people, migration of people who refuse to assimilate will irrevocably harm Europe.
I recently spent a fair bit of time in Sweden, including visiting no-go areas of Malmö. Media headlines don’t bother me, and I don’t see migrants as security risks.

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