I can’t believe more attention has not been paid to this sad sad story found here and here about North Korea devaluing their currency 100/1. How would you feel if you had 10,000 dollars in the bank and unannounced, President Obama decided that you now have 1,000 dollars in the bank? That’s exactly what happened in North Korea. Korea tests nukes and it's all over the news, they devalue their currency 100/1 risking starvation for the poor and you don't see much at all about it.
On November 30th the Communist government of North Korea revalued their currency. The currency reset pegs 100 old Won to 1 New Won - which effectively knocked two zeros off the value of the old currency in a 1/100 reset. Citizens were only allowed to trade in 100,000 won for the new money ($690) but after protests from the elite, that the number had been raised 50,000 won per family member. North Koreans were instructed to deposit their remaining money into government run banks. The official exchange rate was 145 won to the dollar, but more than 3,000 won were needed to buy one dollar in the black market according to Dong Yong -Sueng, a Senior fellow at Samsung Economic Research Institute in Seoul.
In 2002 the Communist government had trouble feeding it’s people so it allowed some private farmers markets. The articles speculate that the move was done to curb inflation and retake power from merchants. Most North Korean citizens receive ‘food allowances” from work.
“One of the worries our North Korean staff have is whether they will have enough food to get through to next week,” the manager of a foreign organisation in Pyongyang said. “Our employees have access to foreign currency but most people don’t and they could be in trouble.”
"They've tried to wind back the system, but they're potentially teaching the people that markets can't be controlled," says Shaun Cochran, head of Korea research at CLSA Asia-Pacific Markets, who published a report on North Korea's move.”
Government run health care anyone?
- On December 1st angry protesters in Hanhung burned piles of the former currency and wrote graffiti on government buildings and Universities.
- The WSJ article found a Seoul-based shortwave radio station reporting Pyongsong Police killing two men who tried to divide their savings among a larger group of people to get around maximum government redemption. So for example you and your friend run a successful shop, saved your money and have the equivalent 40,000 USD. When the currency reset is announced you give your money to 40 people in an attempt to convert all of your money. The government thugs don’t like this so they murder you.
- An older couple killed themselves.
- On December 4th North Korean border guards were given authority to shoot and kill people who tried to flee the border illegally.
When one observes the nightmare of the desperate efforts made by hundreds of thousands of people struggling to escape from the socialized countries of Europe, to escape over barbed-wire fences, under machine-gun fire—one can no longer believe that socialism, in any of its forms, is motivated by benevolence and by the desire to achieve men’s welfare. - AR
Good Friends, a Buddhist charity group based in Seoul and Washington with a network of contacts in North Korea, reported instances of wealthy people from cities rushing to rural areas on Monday, in hopes of buying commodities with the old currency before people in those areas heard about the exchange process.
Sounds like there were still some semi-capitalist people that saw what was going on and wanted to do something about it. Go run and trade your old worthless money for anything of tangible value with your less informed neighbors.
“ When people fear their government there is Tyranny; when the government fears the people there is liberty”.
In a 2008 related story, Cristina Kirchner’s government in Argentina nationalized 29 billion dollars worth of Private pension plans in an “anti-corruption and efficiency move). That after defaulting on debt in 2001. Imagine that. You save and invest money into your 401K plan for your whole working life, and then a socialist leader calls you greedy and says that it would be more “efficient” to steal money from you, in order to give that money to people that haven’t saved for retirement. My money is mine, your money is negotiable. Forget the fact that you are entitled to the wealth that you created, some socialist argues that somebody NEEDS your money more than you therefore it is ok to STEAL your money. But don’t worry, that’s Argentina stealing private retirement money, and that’s North Korea making their currency worth 1/100th what it was a month ago. That can’t happen here.