China's Digital Yuan Comes With An Expiration Date

 It's been a long time coming, and now it's almost here.

Last August we reported that China's Commerce Ministry had released fresh details of a pilot program for the country's central bank digital currency (CBDC) to be expanded to several metropolitan areas, including Guangdong-Hong Kong-Macao Greater Bay Area, Beijing-Tianjin-Hebei region, and Yangtze River Delta region. This was the inevitable culmination of a process which started back in 2014 when as we reported at the time, "China Readies Digital Currency, IMF Says "Extremely Beneficial".

Fast forward a few months when China's preparations to rollout a digital yuan gathered pace, and we reported in October that China was poised to give legal backing to the launch of its own sovereign digital currency, "cementing its trailblazer status in virtual currencies far ahead of other countries, after already recently experimenting with large-scale trials of actual payments by consumers, which was met with mixed results." Specifically, the South China Morning Post reported that "The People’s Bank of China published a draft law on Friday that would give legal status to the Digital Currency Electronic Payment (DCEP) system, and for the first time the digital yuan has been included and defined as part of the country’s sovereign fiat currency."

The design framework for the digital yuan had been released one year ago on the heels of Facebook's ambitious but disastrous Libra token rollout after founding corporate partners split for lack of confidence in the project and on fears US federal regulators would seek to block it just as they did encrypted-messaging company Telegram's Gram cryptocurrency.

"The draft law would also forbid any party from making or issuing yuan-backed digital tokens to replace the renminbi in the market," the SCMP said.

This in turn brought us to the so-called "Shenzhen case study"  when in October of 2020, China became the first nation to hold a trial run of its digital currency, when the government in Shenzhen carried out a lottery to give away a total of 10 million yuan (about $1.5 million) worth of the digital currency (nearly 2 million people applied and 50,000 people actually "won").

The winners were required to download a digital Renminbi app in order to receive a "red packet" worth 200 digital yuan ($30), which they can then spend at over 3,000 designated retailers in Shenzhen’s Luohu district, according to China Daily. After that, they’ll be able to buy goods from local pharmacies, supermarkets and even Walmart.

The idea was to not only test the technology involved, but boost consumer spending in the wake of the COVID-19 pandemic. In short, China is not only subsidizing the centrally-planned economy by manipulating the supply-side of the question- it now can prop up demand by handing out digital currency to anyone (or everyone).

Of course, unlike traditional central bank account-based currencies such as reserves, or decentralized cryptocurrencies like bitcoin, China’s digital currency would be controlled by the country’s central bank and will be instantly made available at a moment's notice to anyone who can receive it.

And since "China's adoption of digital central bank tokens is expected to be seamless as most of the nation's digital payments already pass through companies like TenCent and AliPay and are already very popular in the country", we concluded that "the successful Shenzhen test means that a broad rollout is just a matter of time."

Still, one thing was missing: a stamp of approval by the gatekeeper of not only the global payments system, but the protector of the dollar reserve system, SWIFT. But as two months ago, China got that too: as we reported in February, "SWIFT, the global system for financial messaging and cross-border payments, has set up a joint venture with the Chinese central bank’s digital currency research institute and clearing centre, in a sign that China is exploring global use of its planned digital yuan."

Actually, not just "exploring" but thanks to year of testing and partial rollouts, Beijing was about to become the first country in the world set to launch the digital yuan, and with both the IMF's and SWIFT's blessing, we said that it was "just a matter of months if not weeks."

We were right, because just a few days ago, China's "cyber yuan" became official when the WSJ finally caught up, writing "China Creates Its Own Digital Currency, a First for Major Economy."

While regular Zero Hedge readers are quite familiar with the details and chronology of China's transition to a digital currency, which incidentally is precisely the opposite of a cryptocurrency and has absolutely nothing to do with Bitcoin, a fact which Peter Thiel may want to dwell on a little more next time before making sweep and wrong statements about bitcoin, the WSJ focuses more on the geopolitical reasons of China's currency evolution - as a reminder, thousand years ago, when money meant coins, China invented paper currency, and now the Chinese government is minting cash digitally, in what the WSJ said is a "re-imagination of money that could shake a pillar of American power" - and specifically how to approach a decoupling from the global reserve currency, the US dollar so not only can Beijing avoid the "nuclear option", a weaponized US dollar, but allow countries that the US seeks to punish like Iran, a viable alternative (remember, the enemies of China's enemies - and none is bigger than the US - is China's friend). Here is the WSJ:

The U.S., as the issuer of dollars that the world’s more than 21,000 banks need to do business, has long demanded insight into major cross-border currency movements. This gives Washington the ability to freeze individuals and institutions out of the global financial system by barring banks from doing transactions with them, a practice criticized as “dollar weaponization.”

...

The digital yuan could give those the U.S. seeks to penalize a way to exchange money without U.S. knowledge. Exchanges wouldn’t need to use SWIFT, the messaging network that is used in money transfers between commercial banks and that can be monitored by the U.S. government.

To be sure, a credible alternative to the dollar, reduces the need to hoard the currency for US trade partners which in turn would have profound implications on global saving patterns, from there, global capital flows. The consequences for the perpetual US current account deficit would be unprecedented.

In addition to realigining the global balance of monetary power virtually overnight, China's the digital currency kills another bird with the same binary stone: it allows unprecedented surveillance and supervision over every single transaction.

[The digital yuan is] also trackable, adding another tool to China’s heavy state surveillance. The government deploys hundreds of millions of facial-recognition cameras to monitor its population, sometimes using them to levy fines for activities such as jaywalking. A digital currency would make it possible to both mete out and collect fines as soon as an infraction was detected.

A burst of cash-accumulation in China last year indicates residents’ concern about the central bank’s eye on every transaction. Song Ke, a finance professor at Renmin University in Beijing, told a recent conference that China’s measure of yuan in circulation, or cash, popped up 10% in 2020.

Then there are the myriad boosts to China's ironclad capital controls:

While China hasn’t published final legislation for the program, the central bank says it may initially impose limits on how much digital yuan individuals can keep on their person, as a way to control how it circulates and provide users a dose of security and privacy.

To be sure, none of this is actually new as we have discussed all these nuances of the digital yuan before. What is now, is this blurb in the WSJ article:

The money itself is programmable. Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start.

And there you have it: the Keynesian wet dream to boost the velocity of mean finally comes true. For the past decade we have joked that it is only a matter of time before central banks slap on an expiration date on every monetary unit in circulation...

@GreekFire23 aka the idiocy of paper money with an expiration date

— zerohedge (@zerohedge) December 2, 2013

... to offset the creeping petrification of the monetary system, where negative rates have sparked even more saving and not spending as central banks had intended...

... and where only the threat of money confiscation - which is what a monetary expiration date actually does - can spark aggressive spending, and eventually, runaway inflation.

Well, that's precisely what China is now ready to do... and it's only a matter of time before other central banks follow suit.  As a reminder, according to tentative estimates for the rollout of ISO 20022, which is the required universal transaction standard which will make payment in digital currencies possible, we are looking at a 2022 launch date, although China looks ready to go live as soon as this year.

There is one final, geopolitical reason behind China's decision to give its digital currency an expiration date: as Byrne Hobart writes,  "programmable money, tied to real-world identities, and universally tracked by a central bank, starts to look suspiciously like a substitute for the consumer of last resort. Every year that China gets richer, domestic consumption plays a bigger role (exports were 26% of China's GDP in 2010, and 18% last year). If domestic consumption can be tightly controlled, then it's a way to not just increase the volume of consumption but to control the variance of demand for the goods China produces. It's not yet enough to match the size and variability of global demand for China's exports, but every year it gets closer."

In short, while the US and China are both talking seriously about decoupling, the digital yuan - which is now a reality - indicates that China's government is not only more effectively planning for it, but will be the first to fully sever all ties with the US... when the moment comes.

Finally, for those who have missed our reporting on this fascinating issue, here again is Rabobank's Wim Boonstra explaining not only why China will be the first country to launch a digital currency but also looking at what happens next:

China Will Be The First Country To Launch A Digital Currency: What Happens Then

• China may be the first major country to launch a central bank digital currency or CBDC
• The Chinese CBDC, named DCEP, will strengthen the position of the central bank and help to further modernize the Chinese economy
• The DCEP will probably also be available for China’s trade partners, to begin with Africa
• The DCEP may strengthen the international position of the renminbi to the detriment of the euro
• The arrival of the DCEP should be a strong wake-up call for Western, especially European, policymakers

Introduction

Most central banks are busy preparing for the potential introduction of central bank digital currency (CBDC). CBDC is a digital currency issued by the central bank. It is sometimes referred to as a digital version of a bank note, but in many cases this is not correct. There are indeed many different potential variants.

So far, virtually all the central banks are keeping their options open as to whether a CBDC will ultimately appear.

China, where a far-reaching trial is under way, is the major exception. If this trial is successful, one can expect the Chinese CBDC to be introduced widely in the near future. China is therefore comfortably leading the way because the country has big ambitions for its digital currency. First, it should provide a sizable boost to the Chinese economy; second, it will concurrently further increase the Chinese government’s control of Chinese society; finally, the new currency is part of an ambitious plan to strengthen the international position of the renminbi, the Chinese currency, and potentially at the expense of the euro in particular. This Chinese decisiveness should spur European policymakers into action by further strengthening the euro.

China: from cash-based to almost completely cashless money in 10 years’ time

Not so long ago, retail payments in China were still almost entirely made in cash. There has been a revolution in payments traffic since that time, and China is now one of the leading countries in cashless payments. Unlike in other countries, such as the Netherlands and Sweden, in China this development did not originate from the banking system, but it was induced by a few key apps from relatively young Fintech companies such as WeChat (Tencent) and Alipay (Ant Financial). These parties, that form a kind of extra layer between the banks and their customers, now have a collective market share of more than 90% in Chinese payments cashless retail payments. The Chinese cashless payments system is already able to settle approximately 100,000 transactions per second.

The Chinese CBDC: DCEP

Against this background, the People’s Bank of China (PBoC), the Chinese central bank, has taken the initiative of developing its own digital currency known as the Digital Currency Electronic Payment (DCEP). Above all, the DCEP is a digital alternative to bank notes, although it has features that differ from cash in certain respects (see below). The DCEP does however have the same value as a renminbi.

The technology that can be used by the public for payments is based on traditional payment technology and not on blockchain technology. This is the only way to achieve the necessary scale. The aim is to reach a capacity of 300,000 transactions per second. The central bank might itself use blockchain, for example for wholesale transactions or settlements in DCEP between private banks. Although the DCEP is a cashless currency that will be held in an account with a private entity, there is also the possibility of using a token-based functionality on for example a chip to effect peer-to-peer payments, even where there is no Internet. This is especially needed for successful adoption in the rural areas of China. This token-based functionality will be widely used, as a result of which the DCEP will compete with cash. A sizable trial has been running for several months in which tens of thousands of people have been participating.

What does the PBoC want to achieve with the DCEP?

The PBoC has several objectives with the introduction of the DCEP.

Prevention of a monopoly in the payment system

The PBoC wants to prevent a situation in which WeChat and AliPay take over the Chinese payment system. It is concerned that the entire payment system will soon fall into the hands of these private parties. The DCEP therefore has to restrict the involvement of these parties and increase the role of the central bank in the payment system. It is even more likely that any key private firm will be prevented to become a dominant player, as ultimately China is not a ‘normal’ market economy (which explains Beijing's current crackdown on Ant Financial far better than just a feud between Xi Jinping and Jack Ma).

Promotion of financial inclusion and further reduction of the role played by cash

Highly efficient cashless payments dominate in large parts of China. But in the poorer regions, especially the rural areas, people have less access to banking services such as regular credit. In these areas, cash still plays an important role. Payments in the criminal underworld, including the illegal gambling industry, are also still largely made in cash. The DCEP will offer people in these regions full access to financial services, but it can also reduce the importance of cash payments. The main aim of the DCEP is therefore to replace cash. In terms of features, it will also closely resemble cash.

Better information on payment flows and prevention of illegal transactions

Unlike payment transactions using a bank account, which by definition leave traces in a bank’s records, cash payments are highly anonymous. As we have said, the DCEP will closely resemble cash, with the possibility of making payments directly from one person to another. Some degree of anonymity would thus appear to be safeguarded. But on further consideration, it becomes clear that the PBoC, and therefore the Chinese government, will have full insight.

To be precise, in a transaction between two people effected with DCEP, anonymity between these two people will be assured, as is the case with a cash payment. But the PBoC can always establish at a later date who were involved in the transaction. This will enable more effective tracing of illegal transactions than if these were effected in cash. But there will also be detailed insight into the payment behavior of individuals.

Restricting capital flight

Although China does not have free cross-border capital movements, capital flight is a common and substantial phenomenon. Capital flight can occur in various ways, and is often difficult to trace. For example, internationally trading Chinese companies can for instance manipulate invoices, as a result of which money can be transferred abroad. People can also use the Bitcoin system to hide money from the authorities and/or transfer it abroad.

The Chinese government, like its counterparts in Europe and the US, is concerned that stablecoins could assume an important role as an alternative to the regular money in circulation, but also may develop into a vehicle for capital flight (read "How The Chinese Use Illegal Online Gambling And Tether To Launder Over $1 Trillion Yuan"). Stablecoins are cryptos like Bitcoin, but unlike Bitcoin they are, at least in theory, secured by financial assets. When Facebook announced in April 2020 that it intends to add national stablecoins to its Libra, a digital currency basket that it announced in 2019, central banks reacted immediately by devoting more urgent attention to CBDC.23 Such stablecoins could for example create the possibility that people could use a Libra-stablecoin to transfer money abroad. With the DCEP, the PBoC intends to slow the momentum of private stablecoins. This is also an important consideration for the Western central banks.

Retention of monetary sovereignty

This is connected with the previous point. If people have easy access to a private stablecoin, it could actually in a sense reduce the role of the national currency. Something similar actually happened in Zimbabwe, where confidence in the national currency completely vanished as a result of hyperinflation and people turned en masse to foreign currencies such as US dollars and South African rand. In such a situation, the national central bank loses control of monetary conditions in its own country. Importantly, however, the DCEP could also be used by China to interfere with monetary sovereignty in other countries.

What about privacy?

The PBoC says it will respect the privacy of people and therefore the anonymity of the transactions but at the same time it says that DCEP will help it to detect illegal transactions. What this probably comes down to in practice is that people will be able to effect payments and retain anonymity between each other, but that the central bank will on the other hand be able to view the transactions. Anonymity will therefore not be guaranteed and the central bank will have much greater insight into people’s payment behaviour than it has at the moment. The DCEP will also have the status of legal tender. This means that Chinese residents will be obliged to accept the DCEP, as confirmed by various statements from the central bank on the issue (South China Morning Post, 10 November 2020). The DCEP is thus not really coming into being as a result of strong demand from the Chinese public, but it is being imposed on the population by the government. Moreover, the way the DCEP is designed, it may develop into a perfect vehicle for a quasi-command economy: it allows all transactions to be monitored, and opens the door for a retreat to a more Soviet model of banking, viz. banking under full state control.

Internationalization of the renminbi

The use of the renminbi in international transactions is still relatively limited, certainly in comparison with the dollar and the euro. But China is working steadily on increasing its usage, and even hopes that one day the renminbi can succeed the dollar as the global reserve currency. China sees the DCEP as an important vehicle for strengthening the renminbi’s international position, as foreigners will also be able to use the DCEP in transactions with China.

The benefit of this for China is that it can settle more of its international trade in (digital) renminbi. China has initially targeted Africa in this respect. Many African countries do not have fully convertible currencies and mutual trade is frequently settled in US dollars, which is expensive. China is aiming to achieve a situation in which African countries can use the DCEP not only in their trade with China, but will also use it for their domestic transactions. This is a good example of how China is aiming to position itself internationally and how various projects and institutions will cooperate under the direction of the government. The newest model of the Huawei smartphone indeed includes an app enabling payment in DCEP without the need for Internet (Eurasia). Huawei is currently already a leading telecoms provider in Africa, which gives China a head start. In other parts of the world, where Huawei is less dominant or even banned, it will off course be less simple for China to push the DCEP ahead.

Note that while China intends to strengthen its own monetary sovereignty with the DCEP, it clearly has no qualms regarding its use to undermine the monetary sovereignty of other countries. If not only a larger proportion of the trade between China and African countries but also part of intra-African trade could soon be settled in DCEP, therefore renminbi, international use of the Chinese currency will significantly increase. Note, that if a larger share of China’s international trade will be conducted in DCEP, it will also become more difficult for Chinese im- and exporters to use trade as a way to channel funds abroad. So it will held the Chinese government to reduce capital flight, although complete elimination of this phenomenon will not be possible.

Decision time: is the DCEP a wake-up call?

China is leading internationally with the introduction of CBDC, and is clearly moving in a different direction than many other countries considering a similar move. The debate in Europe is still mainly about the form the digital euro, its CBDC, should take, the question of whether there is consumer demand for it, and who should pay for it. The Chinese authorities are taking a more strategic approach, and most of all from the perspective of whether a digital currency can contribute to strengthening/entrenching China’s international position.

Assuming that the current Chinese trials are successful, we could very well see the DCEP appear as early as next year. This could be a significant step in the further movement of the Chinese economy towards cashless money. The payments system would be further strengthened by the DCEP, as this will prevent large private parties gaining a duopoly with the market power that this would entail. Financial inclusion would be improved in the underdeveloped areas, and everyone would have access to cashless money and the associated financial services that this would make possible. The black economy would be further reduced, and the Chinese government will have better insight (and control) of the payment behaviour of its citizens to an extent that we in the West would probably see as unacceptable. Lastly, the introduction of the DCEP can discourage capital flight and probably strengthen the renminbi’s international position.

All in all, the DCEP will certainly make a positive contribution to the further development of the Chinese economy. Although the DCEP looks to be less innovative than the CBDCs under consideration by the Western central banks in certain respects, the determination shown by China is undoubtedly impressive.

This Chinese resoluteness also shows that China is working very actively on strengthening the renminbi’s international position, with the central bank and companies such as Huawei working closely together to achieve this. While still a long way off, a scenario in which first parts of the African, but later maybe Asian, Latin American of even some European economies will use the renminbi for cross-border and in due course also domestic transactions is gradually becoming more plausible.

One may also expect China to try to get all countries involved in its Belt and Road Initiative to use the DCEP and therefore the renminbi. Today, the renminbi is still a small currency in comparison to the euro and most of all the dollar. But this situation could change if the DCEP becomes widely accepted. In the context of a situation in which the euro’s international position has more or less stagnated over the last decades, this is at the very least somewhat disconcerting.

Of course we may expect that, once the digital renminbi takes off and gains traction, other central banks will react strongly. Especially the US will be determined to hold on to the dollar’s international dominance. The US authorities will soon understand that a successful digital renminbi may in the long run turn out to be a larger threat to the position of the dollar than the euro ever was. The most important difference is that the euro is institutionally weak and European politicians have so far failed to use their currency as a geopolitical instrument. The Chinese government, in contrast, understand very well the power of money as a ‘peaceful’ instrument to increase international political clout.

But after all the good news may be, that the DCEP also turns out to be the important wake-up call that prompts European policymakers to finally devote serious attention to strengthening the international role of the euro. Having the second currency after the US dollar is maybe not optimal, but is not disastrous. Being third after the Chinese renminbi is a different story. In the end, money talks.

* * *

Appendix: what will the DCEP look like?

The exact design of the DCEP is still not clear. According to the BIS, the DCEP will be what is known as a hybrid CBDC. People will hold balances in their names at the central bank, but transactions will be approved using an intermediate layer of private parties (possibly including commercial banks). There will then be no direct interaction between the central bank and the account holders, but people will have an account in their names at the central bank. This would be similar to the ideas being mooted at other central banks such as the ECB and the Bank of England. Bloomberg, Blockchain News and the China Daily on the other hand describe the DCEP as a two-tier system, in which people will not directly hold accounts with the PBoC. According to these reports, in the Chinese system people will hold only a DCEP account with a bank or, more likely, with a payment service provider. These parties will in turn hold a balance with the PBoC as a liquidity reserve that exactly covers the amount of DCEP. They will also settle interbank payments in DCEP. This kind of system is also known as a synthetic CBDC (sCBDC), as people will not have their own CBDC accounts with the central bank. The PBoC will however receive regular statements of effected transactions.

If this last model is adopted, the Chinese CBDC model would be more like a full (liquidity) reserve bank than a real CBDC. A full liquidity reserve bank is a bank that would hold a 100% cash reserve with the central bank against the CBDC payment accounts held with it. But in the Chinese model, there would be no additional institution created, the existing financial institutions would offer additional accounts that would then be 100% backed by central bank reserves. Statements from the PBoC also suggest the direction is more towards a synthetic model. Technically speaking, this would represent a less innovative move than a true CBDC.

 

source: Zerohedge

Listen to Mizoram

 

The strife in Myanmar is impacting the Northeast, Centre needs to discuss concerns flagged by Zoramthanga.

India and Myanmar share a 1,600-km long border and Mizoram alone has a 500-km long exposure to the eastern neighbour along the Chin state.

India’s foreign policy is set in Delhi, and not in a state capital, but the developments in Mizoram have underlined that the Ministry of External Affairs cannot ignore the impact of developments in neighbouring countries on India’s border states. India has not yet taken a position on its relations with the junta that has seized power in Myanmar. When the coup took place, India expressed concern that the democratic transition had been interrupted. Later, as pro-democracy protestors were being gunned down, India endorsed a UN Security Council statement asking the military to show restraint. But as Delhi has put off the inconvenient question, Mizoram chief minister Zoramthanga has indicated that he does not have that luxury. India and Myanmar share a 1,600-km long border and Mizoram alone has a 500-km long exposure to the eastern neighbour along the Chin state. Alleging atrocities by the junta, some 500 people have crossed over into Mizoram seeking refuge. Mizoram and the Chin state have shared ethnicities. India wants to deport these people, and has closed the border. However, Zoramthanga has held a virtual meeting with Zin Mar Aung, the “foreign minister” of the National League for Democracy’s government-in-exile, in which he expressed solidarity with the people of Myanmar.

This unusual “confrontation” has highlighted several issues. Though India has been the strongest democracy in South Asia and has provided a safe haven for people fleeing persecution from as close as Sri Lanka and far as Iran, it is not a signatory to the 1951 Refugee Convention, does not have its own asylum policy, and is uneven in its treatment of people seeking refuge. Over the years, Tamils, Tibetans and Afghans have been welcomed. But with no toolkit to distinguish political or humanitarian refugees from economic migrants, the government has started to discriminate between refuge seekers along religious lines, like in the case of the Rohingya. Under the Citizenship Amendment Act, only Hindus fleeing Islamic countries in the neighbourhood will be welcomed. Confusingly, India has also spoken up for non-refoulement, the principle of not sending refugees back to their home countries if it is likely that they will face persecution. For a country that prides itself as a member of a democratic quadrilateral and borders several politically unstable countries, India needs a better and more even-handed framework on refugees.

For now, Delhi needs to listen to the urgent voices from Mizoram. True, India has much at stake in Myanmar, in security and strategic terms. But if the Northeast is key to India’s Look East policy, the Centre cannot afford to simply brush aside the concerns of a chief minister of an important border state. If the situation in Myanmar does not improve, what is happening today in Mizoram, could well spread to Manipur and the other states as well.

 

Source: Indian Express Editorial

Tense Peace In Mizoram – Analysis

By Giriraj Bhattacharjee*

In a letter dated March 12, 2021, the Union Ministry of Home Affairs (UMHA), asked Mizoram to take appropriate action, as per law, and maintain strict vigil at the borders to prevent a possible influx of people from Myanmar into India. The instructions also pertained to three other north-eastern States –Nagaland, Manipur and Arunachal Pradesh – that, together with Mizoram, share the 1,643-kilometre-long Indian international boundary with Myanmar.

The February 1, 2021, coup d’état by Tatmadaw (Myanmar Army) followed by civilian protests and violence as a result of a crackdown have led to an influx of Myanmerse nationals into Mizoram.

Significantly, according to a March 6 report, the UMHA instructions come after the Deputy Commissioner of Falam District (Chin Province) of Myanmar, in a letter, officially requested her counterpart in the Champhai District of Mizoram for the return of eight Myanmerse Policemen who have fled to India. The letter noted,

In order to uphold friendly relations between the two neighbour countries, you are kindly requested to detain eight Myanmar police personnel who had arrived to (sic) Indian territories and hand-over to Myanmar.

Meanwhile, on March 8, Mizoram Chief Minister (CM) Zoramthanga observed,

As common-sense dictates, when there is a political problem in one country and when there is a fear for one’s life, if they cross over to the neighbouring countries, then normally they were not sent back.

Although official numbers regarding the influx are not publicly available, on March 8, 2021, Mizoram Chief Minister Zoramthanga put the number between 20 and 30. However, news reports based on State Police assessments put the number at 100 Myanmarese, mostly Policeman and their family members, having taken refuge in five Districts. Six Districts of the State – Champhai, Lawngtlai, Hnahthial, Saiha, Serchhip and Saitual – lie along the Indo- Myanmar boundary.

The plight of the kindred tribes in Myanmar (Chin, Hakha and Mara tribes) evoked compassion and anger in the State, and on February 3, 2021, the Mizo Zirlai Pawl, the apex student body in Mizoram, staged a sit-in protest in Aizawl, the capital city of Mizoram, to seek restoration of democracy in Myanmar.

Meanwhile, for the fifth consecutive year, Mizoram recorded no insurgency linked fatality in 2020. The last insurgency-linked fatality was reported on March 28, 2015, when three Policemen were killed in an ambush by militants of the Democratic faction of the Hmar People’s Convention (HPC-D) near Zokhawthiang in Aizawl District.

In fact, not a single violent incident of any type has been recorded since March 28, 2015. However, militants from neighbouring states use the State as a transit and safe haven, to evade Security Forces.

On March 12, 2021, Police arrested a leader of the National Liberation Front of Tripura (NLFT-Parimal Debbarma) faction, Parimal Debbarma, in Aizawl District.

On March 11, 2021, the Assam Rifles arrested Manipur-based Kuki National Army-India (KNA-I) ‘commander-in-chief’, Nehjang Haokip, in Aizawl District.

The prevailing and sustained peace, moreover, faces a challenge due to the rivalry between Mizo and non-Mizo communities, including Chakmas and Brus.

In Mizoram, Chakmas inhabited villages are located in Lawngtlai and Lunglei Districts. The Chakmas are the inhabitants of the Chittagong Hill Tracts in Bangladesh who, according to Mizo civil society groups, illegally infiltrate across the international border. Mizoram has 318 kilometres of an international border with Bangladesh of which only 155.07 kilometres is covered with barbed wire fencing.

On February, 21, 2020, Mizoram Home Minister Lalchamliana informed the State Assembly that Special Task Force committees had been formed at the District and Sub-divisional levels for detection, detention and deportation of illegal immigrants from Bangladesh in the three border districts of Lunglei, Lawngtlai and Mamit.

Earlier, on March 12, 2020, the then State’s Local Administration Department (LAD) Secretary, Rodney Ralte, stated that an exercise was being carried out since early February 2020, under the joint initiative of the Mizoram Home Department and LAD to detect foreigners. The Secretary also added that there are about 19 unauthorised villages inhabited by Chakma and Bru tribes across Mizoram, 13 in Lunglei District, three in Champhai, two in Mamit and one in Serchhip District. Ratel added,

Strong appeal from civil society groups and student bodies has prompted the State Government to carry out the foreigner detection drive. Genuine residents of Mizoram will be asked to return to their parent villages in the State and foreigners will be pushed back to their respective countries.

This is not the only time that such exercise has been initiated. In March 2019, the State Legislature passed the Mizoram Maintenance of Household Registers Bill, 2019, that sought to identify foreigners residing in the State, so as to prevent “usurpation” of benefits of developmental schemes by those who are not entitled. The Bill is pending with President Ram Nath Kovind for his assent.

The Brus are the inhabitants of Mizoram’s Mamit, Kolasib and Lunglei Districts. The majority of Brus are from Mamit District, which borders Tripura. In Tripura, Brus – also known as Reangs – are the second largest tribe. Tribal rivalry exists in Mizoram due to the Mizo groups’ contention that Brus “are not indigenous to Mizoram.” Mistrust between the two tribal groups is the leading cause of delay in resolving the issue linked to the repatriation of more than 30,000 Brus from Tripura to Mizoram. These people were displaced from the Mizoram to Tripura in 1997 due to the ethnic violence that was sparked by the killing of a forest official in Mizoram by Bru National Liberation Front (BNLF) militants on October 21, 1997. An agreement signed between the Union Government and the Mizoram Bru Refugees Displaced Forum on July 3, 2018, for the repatriation of the Bru tribals to Mizoram has not been implemented thus far.

On March 9, 2021, the Mizo Students’ Union (MSU) gheraoed the Office of the State Higher and Technical Education Department Directorate, to prevent the department Director, a ‘non-local’, Nazuk Kumar, a 2016 batch Indian Administrative Service (IAS) officer who hails from Chandigarh, from attending office. MSU demanded the incumbent be replaced by a Mizo IAS officer. MSU president J. Lalmuanzuala declared, “We want a Mizo officer who understands the local ethos and interests of the students.” However, the protesters dispersed in the evening after they were given verbal assurance by the Government that Kumar would not attend office till her replacement too charge. The State Medical and Technical Entrance Examination (SMATEE) is conducted by the department.

The preference of a Mizo official over non-Mizos is linked to a similar protest in 2015. The MZP had staged a massive protest in 2015 after 38 Chakma students were given seats for medical and technical education under Category-I of SMATEE. In MZP’s view, these seats are exclusively for Mizos. A legal battle based on claims and counter claims followed, which was settled when the Gauhati High Court quashed the Mizoram (Selection of Candidates for Higher Technical Courses) Rules, 2016, putting the “Zo-ethnic people” (Mizos) who are known as indigenous under Category-I and “non-Zo ethnic people” under Category-II.

The underlying ethnic tension between the Mizos and non-Mizos have led to occasional violent outbursts.

On January 14, 2020, an irate mob numbering about 800 staged a protest rally and vandalized more than 50 dwellings at Nghalimlui in the Lawngtlai District. The protest rally was reportedly against the murder of a Mizo youth, allegedly perpetrated by three Bru tribals. The incident was linked to an individual identified as A. Lalrawnliana, whose body was recovered from a Bru dominated area near Nghalimlui village in Lawngtlai District. He had been missing since January 4, 2020.

Predictably, the Union Home Ministry had mediated a solution by settling the displaced Brus in Tripura. On January 16, 2020, an agreement  was signed by representatives of the Brus, Tripura, Mizoram and the Union Government, in the presence of Union Home Minister Amit Shah, to resettle the Brus in Tripura.

Another issue is the interstate border dispute with Assam and Tripura. Both Mizoram and Tripura have reasserted their respective claims over Phuldungsei village in the Jampui Hill Range in the North Tripura District [Tripura] – Mamit District [Mizoram] area. On the Assam-Mizoram border, three points – Lailapur in Cachar District in Assam and Vairengte in the Kolasib District of Mizoram; Muolmawi (Baruatilla) in Karimganj District of Assam and Thinghlun village in the Mamit District in Mizoram; and Kachurtal (Zophai area) village in the Hailakandi District of Assam and Bairabi village in Kolasib District of Mizoram.

Further, the unfenced international borders with both Myanmar and Bangladesh remain a continuing concern. On September 28, 2020, the Border Security Force (BSF), in a special operation, recovered a huge cache of arms and ammunition on the outskirts of Phuldungsei village in Mamit District along the Indo-Bangladesh border. The cache included 28 AK-series rifles along with 7,894 rounds of ammunition and 28 magazines.

Separately, an investigation by the Frontier Despatch, a Mizo investigative weekly, claimed that, between 2009 and 2019, the State Police and Excise and Narcotics Department (END) had registered a total of 33,592 drug and liquor abuse cases (Mizoram is a dry State with total prohibition). The END data for financial year 2020-21 (data till February 28) indicates that 436 persons were arrested in 336 cases under the Narcotics Drugs and Psychotropic Substance (NDPS) Act, 1985.

Mizoram has remained relatively peaceful since the negotiated end to a 20-year insurgency in 1986, but the peace is sometimes challenged by inter-ethnic tension between dominant Mizos and the minor tribes. The amicable and just resolution of these differences is essential if enduring peace is to be established in the State. Constant vigil along the international boundary with Myanmar and Bangladesh is another imperative, as is a resolution of inter-state boundary disputes.

*Giriraj Bhattacharjee
Research Associate, Institute for Conflict Management

 

Source: SATP.org

Do You Experience Secual Regret?

Experiencing sexual regret doesn’t appear to result in less regrettable behavior in the future. New research explores why women tend to regret engaging in casual sex while men tend to regret passing up such opportunities. Sexual regret does not appear to serve an adaptive function.

Experiencing sexual regret doesn’t appear to result in less regrettable behavior in the future

New research explores why women tend to regret engaging in casual sex while men tend to regret passing up such opportunities

by Beth Ellwood

Men and women often experience different forms of regret when it comes to casual sex — women tend to regret having casual sexual encounters, and men tend to regret not having them. While some researchers have suggested that these differences reflect contrasting sexual strategies, according to a study published in Evolutionary Psychology, sexual regret does not appear to serve an adaptive function.

Sexual strategies theory posits that women are less likely to seek casual sexual encounters than men are. This is because, as child-bearers, the cost of casual sex with an uninvested partner is greater for women than it is for men. It has been proposed that these different mating strategies might explain why men and women show different forms of regret concerning casual sex. These regret differences could be adaptive in that they may cause men and women to change their future sexual behaviors accordingly.

As researchers Leif Edward Ottesen Kennair and his colleagues say, no studies have yet explored whether sexual regret appears to be adaptive or not. The researchers say that sexual regret could also reflect stable individual differences in sociosexual attitudes — that is, attitudes toward uncommitted sexual relations. If this is the case, sexual regret should not change behavior.

“We have been collaborating with David Buss for a long time. He co-authored a paper on the evolutionary psychology of short-term sexual regret (Galperin et al., 2013), and suggested that we ought to consider whether the sex difference also existed in the more gender egalitarian and sexually liberal (compared with the US) Norway,” explained Kennair, a professor of psychology at the Norwegian University of Science and Technology.

“We did and published a replication of the original findings in 2016: men more than women regret passing up short-term sex, while women more than men regret having had short-term sex. We also considered some of the proximate mechanisms proposed by Galperin. We replicated these findings in two new papers the next years in collaboration with Buss’ lab, considering among other differences between the US and Norway on sexual liberal attitudes and religiosity and other proximate mechanisms.”

“The research confirmed the predictive power of Sexual Strategies Theory,” Kennair said. “However, no research had throughout the years considered the ultimate function proposed by Galperin et al.: That short-term regret should improve future sexual choices / adaptive behavior.”

For their new work, the researchers conducted a longitudinal study to examine whether men’s and women’s current sexual regret would predict changes in their future behavior and their future regret. Students between the ages of 18 and 30 completed online questionnaires that addressed their thoughts and behaviors concerning their most recent casual sex encounters. At Time 1, 399 students participated. Around 5 months later, 222 of these respondents completed the questionnaire again.

In line with previous research, the results showed that women regretted having had casual sex significantly more than men did, while men regretted having missed opportunities for casual sex more than women did. However, the researchers found little evidence to suggest that sexual regret served an adaptive function, as it did not appear to affect the participants’ behavior.

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First, regret for having had casual sex reported at Time 1 was not linked to a smaller number of sexual partners at Time 2. Regret for having missed out on casual sex reported at Time 1 was not linked to a greater number of one-night stands reported at Time 2.

“An important aspect of a functional emotion is that it should produce change in behavior, and thus reduce the necessity of experiencing the emotion . . . It was therefore surprising, from a functional perspective, that regret as counterfactual cognitive-emotional process was both continuous and relatively stable across different one-night stands for the same participants,” the researchers wrote in their study.

Instead, the findings supported the idea that sexual regret reflects either stable, individual factors or contextual factors. Across both waves, sexual disgust was a consistent predictor of casual sex regret. Subjects’ attitudes toward uncommitted sex were also linked to casual sex regret, but only at the first assessment and not at Time 2. Finally, respondents who rated their latest casual sex partner higher in terms of attractiveness as a short-term partner, and respondents who reported having taken the initiative to engage in casual sex showed lower regret at Time 1.

“I believe Edith Piaff sang the best summary: She regrets nothing,” Kennair told PsyPost. “Most people regret a legion of different choices. Maybe we actually regret bad choices we repeat, such as bad lifestyle and health behavior choices. And we keep making those bad choices. Regretting these might not change our behavior. Maybe instead of reducing our mood, in an indirect attempt at motivating future behavioral change, we should focus on changing behavior directly, here and now.”

The researchers added that their study is preliminary, but the findings cautiously suggest that regret does not offer an adaptive function that changes behavior in any logical way, offering no evidence for mating strategy shifts.

“Galperin et al. did not specify what more adaptive future sexual behavior might be,” Kennair explained. “While maybe inaction regret resulting in less inaction (i.e. saying yes to the sex next time it is on offer) is maybe an obvious behavioral change, it is not completely clear. Also, despite being an unusual longitudinal study, we might need to repeat measures more times and across a longer time period. It is surprising how many people find regret to be adaptive, but how little research actually tests whether it really is adaptive.”

“We are evolutionary psychologists,” Kennair added. “So in general we test hypotheses based on evolutionary theory and describe mental adaptations. However, all our manifest behavior is not adaptive or the result of adaptations. Some phenomena like regret and rumination may not be adaptive.”

The study, “The Function of Casual Sex Action and Inaction Regret: A Longitudinal Investigation”, was authored by Leif Edward Ottesen Kennair, Trond Viggo Grøntvedt, and Mons Bendixen.

What Lies Ahead? The Grand Solar Minimum

By Luke Eastwood

We are all aware of the environnmental crisis that humanity (and all life on Earth) faces, characterised by the term ‘climate change’. Much of the current thinking in the scientific community is promoting the idea that our planet is rapidly warming due to excess CO2 (carbon dioxide) gas produced by humans in the last few centuries, and the last 70 years in particular.

While there is a very strong and hard to deny case to suggest that human activity is the main cause of environmental destruction, the premise that it is due primarily to CO2 emissions is beginning to look somewhat flawed. I am well aware that the previous sentence is likely to draw a lot of negative attention and criticism, with accusations of ‘climate denier’ being thrown at me. However, the situation is not that simple as to be a case of ‘global warming’ being the main influence or no influence at all.

The reality of the situation is complex. In my opinion the main drivers of the  environmental crisis are many, but put in simple terms – destruction of wild habitats, pollution due to industrialisation, over-use of soils, over-population, erosion of soils leading to desertification or barren, infertile landscapes, monoculture agriculture and climate fluctuations. Notice that I did not use the term ‘climate change’ which in the current scientific norm implies warming.

While the planet has undoubtedly warmed up, in part due to human activity and CO2 production, the current popular thinking completely ignores historical CO2 levels beyond the last millennium and also the primary input on temperatures on this planet and all eight of the planets in this solar system. That input, although largely ignored at the moment, is of course our sun, which on average generates 3.8 x 1026 Joules (energy) per second. Human energy usage per year is around 5 x 1020 Joules, which is about 1 million times less than the Sun produces during 1 second! In fact, in the whole of human history we have used less energy that the Sun produces in that 1 second.

So, given the above, it stand to reason that the energy of the Sun must have a significant effect on the energy available on this planet and the heat energy (temperature) that is captured by it, as it rotates around the Sun. If we look at the history of Earth, particularly through the use of ice-core samples, we can see that the temperatures on our planet follow a very distinct pattern. On a macro level this can be observed as a huge cycle of glacials (ice-ages) and interglacials, with the ice ages lasting many times longer than the interglacial (warm) periods.  We are currently in an interglacial, which began approximately 11,500 years ago and it is estimated that it will end some time within the next 50,000 years.

On a micro level, the Sun undergoes cycles of around 11 years  known as the solar magnetic activity cycle, which has been studied and recorded by humans for approximately 400 years. During each cycle the number of sunspots peaks and falls in a recognisable pattern. However, this pattern of approx. 11 years is itself part of a much longer solar pattern of solar minimums and solar maximums. For instance the Medieval maximum (grand solar maximum) lasted from 1100-1250 (warm period) and the famous Maunder Minimum (grand solar minimum) lasted from 1645-1715 (cold period). The later was known as a mini  ice age due the particularly drastic drop in global temperatures that affected crop-growth and led to bitter winters for a period of 70 years.

Scientists that study the sun are well aware of these periodic cycles both on the 11 year scale and on the larger scale of 70–100 years, known as the Gleissberg cycle. We have just finished a solar maximum cycle of around 70 years and are now heading into a both a new 11 year cycle and a new grand solar minimum cycle that will reach its lowest (coldest) point some time between 2030 and 2040.  You don’t need to take my word for it – this has been confirmed by NASA and by the National Oceanic and Atmosphere Administration (NOAA). NOAA predictions of sunspot and radio flux appears to show a ‘full-blown’ grand solar minimum (GSM) which will last from the late-2020s to at least the 2040s.

This means that the coming solar minimum is going to be not only a grand solar minimum, but perhaps the worst one since the Maunder Minimum in the 1600s. One would expert this to have been front-page news, but outside of the scientific community this information is virtually unheard of and little understood. One must ask – why is this the case? The simple answer to this question is that the solar predictions destroy the current scientific and cultural narrative of ‘Climate Change’ in the form of warming.

There will indeed be climate change in the coming decades, but for the next 10 to 40 years it is going to get colder, not warmer! The same thing will happen on the 7 other planets in this solar system, because the main factor affecting planetary temperatures is the activity of the Sun. Given that so much time, effort and money has been invested in ‘global warming’ as a premise for change in how human society is run, it is very much an “inconvenient truth” that is beginning to arrive just at the time when we are beginning to take more affirmative action on environmental issues.

The controversial news that the Earth (and all 7 other planets) will cool down in the next 10-40 years is politically highly inconvenient and that is why it is being kept quiet. Getting rid of fossil fuels, caring for our environment, lowering industrial output, ending industrial farming and reducing livestock, plus a gradual reduction in the human population are all excellent goals.  Unfortunately the rationale for doing this, that has been sold to the public, is most likely entirely misguided.  The net effect of this false premise may well be that environmentalists and main-stream public scientists will look like fools by the end of this decade. The cooling of planet Earth may well be seen as justification to abandon environmental concerns and reform of our economic systems, which would be a terrible tragedy.

In order to avoid this highly likely total embarrassment, world governments and the scientific community need to admit that the coming dip in solar energy output is going to lead to the cooling of our planet for at least 2 decades, possibly 4 or 5 or even 7 decades!  This is not conspiracy, this is not mis-information or propaganda – this is proven, verifiable fact which can be validated by current solar observation, previous observation of sun cycles for 400 years and ice-core samples stretching back millions of years.

As someone who has been involved in the environmental movement since I was 16, when I joined a conservation group at college, I am very concerned about how this plays out. If the public feels that they have been lied to it may lead to a backlash and a disinterest in environmental issues. The reasons I outlined at the beginning of this article are more than sufficient for humanity to change its modus operandi. One does not need to concoct highly improbable narratives about the world ‘burning up’ within decades to justify environmental activism. In fact the coming GSM is likely to produce similar negative effects to predicted ‘global warming’, such as habitat loss, loss of farming land, a drop in food availability, migration, social unrest and possibly other problems too.

It is time that the whole ‘climate change’ theory was re-assessed and the known solar activity cycle as observed by NOAA and NASA taken into account. To fail to do so is total folly and only creates another problem, that will come back to haunt us if the grand solar minimum is ignored.  We do need to take better care of our world and learn to live far more harmoniously within it, but we need to base our actions on good science and not on misleading or inaccurate information.

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Is Gold Money?

Is gold money? Many would say so, and a web search returns tens of thousands of additional affirmative responses. If you want to start a fight with a gold bug, take the opposite view.

But is it so?

To answer the question of whether gold is money requires a definition. This one, from Wikipedia, is typical:

Money is anything that is generally accepted in payment for goods and services and in repayment of debts. The main uses of money are as a medium of exchange, a unit of account, and a store of value.

Wikipedia refers to three properties of money. However, according to the Austrian economist Carl Menger, its acceptability in trade is the defining property. While money undoubtedly does serve as a store of value and a unit of account, these properties are derivative, not definitional properties. The reason that a medium of exchange necessarily is also a store of value is the anticipation of its exchange value in the future.

On this point Menger wrote,

[I]t appears to me to be just as certain that the functions of being a "measure of value" and a "store of value" must not be attributed to money as such, since these functions are of a merely accidental nature and are not an essential part of the concept of money.

Using the above definition, the question of whether any particular good is or is not money, can be posed in this way: is the good in question accepted as the final means of payment for transactions?

At present, in the developed world, nearly every nation has its own money or belongs to a currency union, such as the EU. Some nations in the developing world use the US dollar. In highly inflationary environments, the local currency is often spontaneously rejected in favor of the dollar or another foreign currency. Hardly anywhere do we find gold generally accepted as a means of payment. So gold must fail the definitional test of moneyness.

Is this the end of the argument (and so the end of a very short article)? Not quite. Gold is not money, but it has most of the desirable properties of money, and the process by which it became money in the past gives some clues about how it may become money once again.

A store of value is not necessarily a medium of exchange. As Menger says, a nonmonetary commodity can serve as a store of value:

But the notion that attributes to money as such the function of also transferring "values" from the present into the future must be designated as erroneous. Although metallic money, because of its durability and low cost of preservation, is doubtless suitable for this purpose also, it is nevertheless clear that other commodities are still better suited for it.

Analyst Paul van Eeden has shown that gold has maintained its purchasing power relative to the time that the gold standard ended. In "Is Gold an Inflation Hedge?" I have provided links to Van Eeden's articles and a more detailed discussion. I will summarize his analysis here. A theoretical gold price equivalent which would give gold the same purchasing power as it had at the end of the gold standard is calculated by taking the convertibility ratio of $35 in 1933, and then multiplying by a factor representing the growth in the quantity of fiat money from that time. Under the classical gold standard, gold was the entire world's money. By counting worldwide growth in currency (not only US dollars) and comparing it to a worldwide price currency index of the gold price, van Eeden avoids the pitfalls of looking only at gold's dollar price, which can experience significant volatility due to the dollar's exchange rate against other national currencies.

Van Eeden's research shows that, since the end of the gold standard, the price of gold in units of fiat currency has tracked its purchasing-power-equivalent price fairly well, oscillating in a band around its theoretical value. In essence, the purchasing power of gold has been reasonably stable in the time since the end of the gold standard, which is only another way of saying that gold has served as a store of value.

Even today most of the demand for gold is not for direct use, but demand to hold. In the developed world, people purchase coins and bars for storage in vaults. In other areas, people save by accumulating bullion jewelry. Distinct from ornamental jewelry, bullion jewelry has low workmanship value added. Its price is not much greater than the melt value of its metal content.

I wrote the following in "The Myth of the Gold Supply Deficit":

The World Gold Council estimates that 52% of gold is held as jewelry. James Turk subdivides jewelry holdings into low carat and high carat. The former is purchased mainly for the gold value, as an alternative to buying bars and coins. The latter is purchased mostly for fashion. According to Turk's estimate (which was published in 1996), monetary jewelry at that time accounted for about 60% of jewelry with fashion jewelry accounting for the remaining 40%. However, even when made into jewelry, the gold is not destroyed and can come back into the market as scrap. The WGC figures show significant recovery from scrap.

That gold continued to be a store of value post–gold standard was unexpected by many economists. In the early 1970s, when the dollar's link to gold was cut, economist Milton Friedman predicted that the price of gold would collapse.4 The Nobel laureate believed that the gold derived its value from its relationship with the dollar; without gold backing, there would be far less demand for gold. There would, of course, continue to be industrial demand for the metal, but without monetary demand provided by the dollar, the vast supply that had been accumulated during the preceding centuries would overhand the market, depressing the gold price for the foreseeable future. Friedman could not have been more wrong. It was the dollar that collapsed in the 1970s, while the gold price in dollars began a bull run that was not eclipsed in nominal terms until late last year.

A similar and still widely held view in the world of mainstream financial analysts is that gold has been "demonetized." The argument goes like this: central banks decide what money is; central banks have determined that gold is not money; therefore gold is not money. Only the stupid gold investors haven't figured this out. This view of the gold market sees the price of gold as determined primarily by central banks (who own an estimated 10–17% of aboveground supply). The critical variable is how they will time the sales of their gold hoards without causing a selling panic as market participants realize that their gold coins and bars have no monetary value.

But why is gold a better store of value than most any of a vast number other nonmonetary goods? Why were Milton Friedman and the other economists wrong? Their error was the assumption that political institutions have the final say over what is and is not money. But this is not so: the market has final say. Looking at the process by which money originated from barter helps to understand why. According to Menger, money came into being through the efforts of individuals to expand the range of goods they could acquire through exchange beyond the possibilities available. Some individuals in a barter economy begin by bartering their goods for a commodity that they do not need but is generally in demand throughout the market, with the intention of later exchanging that commodity for other goods. This strategy is called indirect exchange. These astute traders realize that "the acquisition by trade of the consumption goods that he needs…can proceed…much more quickly, more economically, and with a greatly enhanced probability of success."

As societies moved from barter to monetary economies, different goods were in competition with each other for use as money. Over time, as monetary exchange expanded in proportion to barter, some commodities were found to work better as money than others, until only a handful of them became "acceptable to everyone in trade." Those were gold and silver.

What qualities have made gold (and silver) the winners of the monetary competition in centuries past? The qualities most often cited by monetary historians are durability, divisibility, recognizability, portability, scarcity (the difficulty of producing more of it), and a value-to-weight ratio that is neither too high nor too low. Too low a ratio would make it hard to carry enough for spending, while too high a ratio would make small transactions difficult and prevent the commodity from being sufficiently widely owned in the prior barter economy. Gold still has these qualities today. While fiat money has some of them, it fails the scarcity test: it is too easy to create more of it.

The result of market competition is not necessarily permanent. Market competition is an ongoing process. Even when one commodity emerged as money, there continued to be competition from other nonmonetary commodities. Once the world's money, even gold could have lost its place had a superior alternative emerged. But that is not the reason we no longer use it. Political money did not prove its superiority through a market process. What happened instead was a politically imposed change from a better system to a worse system.

Although the central bankers have used political means to replace gold with paper, they do not have the power to end the competition between their money and commodity money. The "demonetization" of gold by central banks has rigged the competition—but not ended it.

Gold as money may not be over for all time. As the monetary system melts down, gold functions as "shadow money," an alternative that competes with the political money. It remains a store of value because of its potential to become money again. There is continuing demand for gold as a hedge against the breakdown of the fiat system.

Governments cannot force people to use their money beyond a point. The market will only continue to accept fiat money as long as it works well enough (or even, not too badly). If governments debase their currency beyond a point where it maintains some value over time, people will stop using government currency and switch to something else.

In countries suffering hyperinflation (or even just excessive inflation), people typically start quoting prices and accepting in trade in the more stable currencies of other countries. Earlier this year, VietNamNet reported that land prices are being quoted in gold rather than the local currency, the dong.

The world is lurching through a serious monetary disorder. The proximate cause is the collapse of the housing bubble and the subprime-credit crisis, but the ultimate cause is the inherently unstable monetary system foisted upon us by a banking cartel. Central bankers are called upon to act as lenders of last resort, but in their efforts to inflate their way out of the credit collapse, they risk igniting a hyperinflationary bonfire that will destroy the world's major fiat currencies. Gold was money once, and could become so again.

[Originally published September 2008.]

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The twilight of Indian democracy

 Protest and journalism are criminal acts, Parliament is irrelevant, duties supersede rights,and profanity flows from the ordinary.

Participants in a protest against the Hathras gangrape being detained in Ahmedabad on October 7. | Sam Panthaky/AFP

By Samar Halarnkar

On October 8, Justice Sanjay Dhar of the Jammu and Kashmir High Court delivered a judgement that was remarkable in its ordinariness: it restated the law, common sense and the basic tenets of – what was once – the world’s largest democracy.

The case he was called to adjudicate upon was a two-year-old story in the Times of India. The headline read: “Stone pelters in J&K now target tourists, four women injured.” It was ordinary journalism, but it led to a criminal case against the reporter for “making or publishing a statement or rumour creating fear or alarm”.

The freedom of the press, said Justice Dhar, could not be imperiled on “grounds that are unknown to law” and “reporting of events, which a journalist has bona fide reason to believe to be true, can never be an offence”.

Yet, this is what journalism in India has become: an offence against the state.

Hectored, threatened, beaten

Journalists in Kashmir bear the brunt of this belief, as they are hectored, threatened, beaten and imprisoned; it is state policy, explicitly stated, to discourage journalism that is “against the national interest”. In Uttar Pradesh, it is unstated but state policy nevertheless to file criminal cases against journalists who do their jobs when the government does not want them to. It was little wonder that earlier this year, India ranked 142 of 180 countries on a global press freedom index, behind countries such as Myanmar, South Sudan and Afghanistan.

In Uttar Pradesh, over the past year, journalists have faced criminal cases for reporting on things as prosaic as a derailed train to a protest; the spectre of arrest hangs over the executive editor of this website for reporting the failure of a government programme; another journalist has been in prison for 24 days over a tweet; and a day before Justice Dhar delivered his judgement, a journalist from Kerala and three others were arrested and charged with sedition and India’s now-notorious anti-terrorism law, the Unlawful Activities (Prevention) Act. The circumstances of their alleged crime were mired in ordinariness – they were headed to Hathras, which the Uttar Pradesh government has declared a site of international conspiracy, and they, the police said, were conspirators.

A protest in Delhi on October 2 to demand justice for the Hathras woman. Credit: Danish Siddiqui/Reuters

I mention journalism because its wellbeing is a test of democratic health (by that measure, of course, India is floundering, given the state of its largely sensation-seeking, government-loving media), but these outrages are not limited to journalism. They come thick and fast every day, as peace activists, professors, students and anyone opposed to the government and its Hindu-majoritarian narrative are questioned, interrogated, threatened or simply imprisoned without bail for investigations that never appear to end or are slapped with cases that may never stand the test of law.

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As for the law, it is being reduced to, at best, a tool to be manipulated, or, at worst, little more than a joke. It has been corrupted by the government, the police and the courts beyond reasonable measure.

Last week, Stan Swamy, 83 and the oldest Indian to be charged under the UAPA, was arrested. A life-long advocate of Adivasi rights and bulwark against their oppression, Swamy is a Jesuit priest, who, a writer once said, “had made people his religion”. His arrest was the 16th in what has come to be known as the Bhima-Koregaon case, a vast, dubious enterprise of defamation and criminalisation that began as a supposed plot to kill the prime minister – an accusation never mentioned since – and degenerated into a vast conspiracy with no credible proof and no sign of trial.

Journalism as crime

In the blink of an eye, India has been dragged from flawed but functioning democracy with reasonably robust institutions to the doorstep of great-leader autocracy. Every disfigurement of the law leads to another, often greater in severity, straining the credulity of the justice system and pushing it further into disrepute and disrepair. Every corrupted precedent encourages another until everyone encourages the profane, even those who promise to stand against it.

In Congress-run Rajasthan, on October 1, criminal conspiracy charges were filed against a journalism for reporting that the deputy chief minister’s phone was tapped. A week later, party leader Rahul Gandhi announced that if India had a free press and functioning institutions, Narendra Modi’s government would fall.

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Indeed, Justice Dhar’s judgement was not a sign of hope. It was an anachronism, a whisper from the past, a straw in a changing wind. On the day that he delivered a reminder of India’s fading democratic norms and constitutional rights, the Supreme Court declared that the freedom of speech and expression was the “most abused right in recent times”.

Lawyers enter the Supreme Court in March. Credit: PTI

This is a court that has almost entirely allied itself with the government and its narrative. As many legal scholars monotonously point out – to no effect – the Supreme Court has placed in cold storage urgent matters, from the controversial new citizenship law to illegal detentions in Kashmir. Far from placing fundamental rights at the centre of its jurisprudence – as every constitutional court should –
the Supreme Court has increasingly turned to preaching about Modi’s pet theme, fundamental duties (inserted into the constitution during the Emergency by India’s first autocrat, Indira Gandhi).

Some fundamental duties have been quietly weaponised and embedded into the emerging enterprise of criminalisation of speech and expression, particularly one related to protecting “sovereignty, unity and integrity”. It is as vague as the interpretation of laws deployed to restrict fundamental rights and push the narrative of one nation, one people, one religion and whatever other façade of unity the government declares as the national interest.

In the pursuit of this alleged national interest – which is anything but – any perversion of democracy is acceptable. We have witnessed the slow throttling of Parliament, which has gone from a house of robust debate to a rubber-stamp of the ruling party. We have witnessed the willingness of the bureaucracy, the police and judges to be enforcers of not the constitution but the writ of the ruling party and its narrative.

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We are witnessing the distinct signs of a democratic twilight. But none of it would be possible without our collective and widespread acceptance, complicity and apathy.

Samar Halarnkar is the editor of Article-14.com, a project that tracks misuse of the law and the hope it offers.

Mizoram: Lest We Remember

By Shekhar Gupta

The Mizo insurgency was no picnic and the two sides matched each other in brutality. China and Pakistan continued to help the MNF.

March 5, 2016 was the 50th anniversary of the Indian Air Force (IAF) strafing and bombing Mizoram, or more specifically, its capital Aizawl, and has thrown up an interesting question: Was Indira Gandhi right to use air power against her own countrymen, the only time it’s ever been done?

Also, should “India” now apologise to the Mizo people? This needs a fairer debate in this season of alternative histories.

Put yourself in Mrs Gandhi's slippers on March 5, 1966. She had been prime minister for just six weeks, following Lal Bahadur Shastri's unexpected death in Tashkent on January 11. India was passing through the worst crisis years of its history. Its biggest war yet (in September 1965, with Pakistan) had just ended in a mutually withering stalemate.

This was when the country was still recovering from the humiliation suffered in the war with China in 1962, the Hazratbal crisis and Kutch skirmish. The Dravida movement was openly secessionist and Naga insurgency was raging with open Pakistani and Chinese support. The Chinese, who had issued India an ultimatum during the 1962 war, were still threatening our borders.

This when India was going through a series of famines and lived a ship-to-mouth existence, while nursing a post-war economy. This is when Laldenga's Mizo National Front (MNF) insurgency broke out, fully with armaments and tactical help from the then East Pakistan. Remember, there was no Indian Army in the Mizo hills then, only a couple of scattered battalions of the paramilitary Assam Rifles. In Aizawl, its officers and troops lived in the garrison with their families.

The rebel blitzkrieg took the key positions of Aizawl and faraway Lunglei — two major habitations.

In Aizawl, the rebels took over the treasury and put up a “sovereign” MNF flag on it. The Assam Rifles garrison was holding out, young officers leading suicidal counters to delay being run over and left to the rebels’ mercy along with their families. But it was just a matter of time. Their SOS was a reality.

The nearest Army units were at least a day’s drive away, and were sure to be blocked on the way. It was in this situation that Mrs Gandhi, then made fun of as “goongi gudiya” (mute doll) decided to use the IAF. To buy time for the Assam Rifles garrison and to slow down rebel gains in Aizawl.

The IAF didn’t have many fighting resources in the east. So a couple of old Toofanis (too obsolete to be used even in the 1965 war) and Hunters were spared for serious strafing. The rest of the strafing, to just create nuisance, panic, and to buy time, was assigned to small Caribou transport planes based in Silchar in the Cachar planes. Crews simply put explosives in the backs of these slow propellor planes, dived over Aizawl and opened their rear, cargo hatches for these to fall randomly. These Caribou pilots included two names that later became more familiar in their political innings: Rajesh Pilot and Suresh Kalmadi.

The rebels fled temporarily. Until the first units of five Paras, commanded by then Major VK “Tubby” Nayar, fought their way through to Aizawl from the plains.

This is the reality. If you want to read this in much greater detail, please refer to late Nirmal Nibedon's classic, The Dagger Brigade. It will bring to you the picture of how grim that situation was. And what a tough but inevitable decision it must have been for a very new prime minister in crisis times. That should place this history in perspective.

Should the Centre now apologise for this? I think apologies were due from both sides. The government gave a free hand to the Army to use the most brutal methods, including the inhuman and degrading regrouping of tribal villages, following the British doctrine in the Malayan insurgency.

The rebels were not nice people either, shooting soldiers, high civilian officials including the ambush of a governor and once broke into the office of the IG of police, killing him, his DIG and SP special branch. The Mizo insurgency was no picnic and the two sides matched each other in brutality. China and Pakistan continued to help the MNF.

There were many rounds of behind-the-scenes peace talks, particularly after Brig T Sailo became chief minister. One of his sons, by the way, was in the group that successfully attacked the IGP office. The first round of peace was a partial success although the amnesty brought several key fighters over ground and mostly in the political mainstream. The full peace was achieved later, in 1985-1986 under the Rajiv Gandhi-Laldenga accord. It fully ended the fighting.

In the election that followed, MNF founder Laldenga became chief minister and unfurled the tricolour on what may have been the treasury in 1966. All apologies, regrets were now mutually exchanged and buried. Mizoram has been totally peaceful since.

The group that massacred the police top brass had an accomplice, the IG’s secretary, Vanlalzari. She was caught, convicted and awarded a very long sentence. She wrote a diary in jail which, called “Zari Diary”, had become a kind of cult document of the rebellion.

I had an English translation that I referred to often, and was always curious to meet her. Now was my opportunity. She was among those released and pardoned as part of the amnesty. I believe the issue was closed with great dignity and mutual self-respect between the Mizo rebels and the government. This peace accord was a great achievement for Laldenga, Rajiv Gandhi and Brig Sailo who had worked relentlessly for it. His son also came overground, was pardoned and became a successful contractor.

I had done a story on the accord for India Today from Mizoram 30 years ago. Please also note my little chat with Vanlalzari of the Zari Diary fame, who was now a free citizen of India. And the immortal line she spoke to me: “We fought for sovereignty. But sovereignty doesn't guarantee freedom. Poland is sovereign, but is it free?” This was 1986.

The writer is a veteran journalist and author