North Koreans are protesting after the government “seized most of its citizens’ money and savings via a new-currency issue.”
“Pyongyang announced Nov. 30 its decision to issue new currency and limit the amount of old currency that could be exchanged to the equivalent of about $40, based on unofficial exchange rates, a step that essentially scrapped all other private money.”
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Nice. Kim Jong Il is taking a page right out of history and doing what FDR did, and Kings before him.
Now you understand why the government cannot be allowed to control the money supply. This could be foreshadowing for us one day…
This could be foreshadowing for us one day…
I’d put it a bit more forcefully —
(a) this is definitely what is going to happen to Americans one day if the US government continues anything remotely similar to its current behavior, and
(b) I’d bet you one million ounces in genuine gold coins that, right now, there is at least one report sitting in someone’s file cabinet in a government building in Washington, D.C. with a detailed plan for doing just this type of thing, just waiting to be dusted off and implemented.
After WW2 my father-in-law inherited a sum of money amounting to the value of the family house that his sister received…
One year later the Deutsche Mark was born and everyone started back with 40 DM – he could just buy a new suit with it.
But what is this number (40) I wonder?
Humm.. now that we live in a global economy, one wonders 1) what would happened to the EFT holding that currency; 2) what about the nations or outside companies holding the IOUs for North Korean; 3) what about the letters of credit that are normal in an import/export world; 4) what about computer systems & the information – ie accounts payable, that already has a $ amount entered; 5) what about salary contracts & payroll & quarterly report & reporting taxes (okay North Korea may be a no tax country.. Not); augh… you get the idea.
If we do this in America, be prepared for the shock waves….
Cathy,
It happened in Mexico when the government issued a new Peso that was equivalente to $1,000 pesos (in other words, by decree the peso lost three zeroes). There is no need this lead to a major clusterf…
Ain’t that the truth.
You can read more about the North Korean currency shift here:
http://globalpapersecurity.com/north-korea-changes-currency-and-rates-100-to-1.htm
And more about it here from the Times online.
http://www.timesonline.co.uk/tol/news/world/asia/article6940482.ece
There were reports of public outrage and confusion after the announcement of the measure, which requires North Koreans to swap existing won notes for new ones at an exchange rate of one to 100 — effectively knocking two zeroes off their value. Because of a cap of 100,000 won per family (£475 at the official exchange rate), anyone with significant holdings of cash will have their savings wiped out.
I’d figure the goal of a regime like NK’s would be to insure no ordinary folk ever have an accumulation of capital…
In 1985, Tanzania did the same thing. Tellers were skimming 5-10% as citizens turned in the old money for the new. Peasants didn’t bother exchanging the money, as the cost of a bus to and from a bank would eat up their savings. Vehicle traffic was stopped at the borders and searched for “illegal” money that had left the country.
Could the same thing happen in the USA or Canada? And where exactly does China store all of its US dollars? In China? In US banks? Are the dollars digital or paper?
It would appear that the link to the comments has been messed up on all blog posts; there is an extra .xml in the URL
Fixed. Remember: there is no creation without destruction.
Just when you look to north Korea to lead by example, they go and start adding smoke to the atmosphere! What will Copenhagen say about this?
Scary thought that something like that could happen here. On the bright side, it shows that North Koreans are starting to lose some fear of their government and are trusting markets more than their dear leader. On the flip side of that, it shows his desperation and a desperate tyrant is never good.
Many countries all over the world tried this trick in recent years. Zimbabwe did it multiple times, Venezuela did it… even in Europe back in the late ’80s/early ’90s the Italian, Spanish and French governments contemplated cutting a few zeros off their currencies. Then the euro arrived…
You can’t cut zeros off gold.
What is wrong with cutting off zeros? How are deprived of anything?
I don’t think it’s cutting off the zeroes that’s necessarily the problem, it’s the cap on how much old money you can exchange for the new money.
æœé²œæ°‘主主义人民共和国的货å¸æ”¿ç–很好，打击了新兴资产资产阶级，维护了广大人民的利益。
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