Here is how they do it in N. Korea - declare the old currency worthless and allow each person to change a limited amount of money, 150000 won (=US$50 on black market) to the new currency. Overnight they wiped out all the savings of its citizens and completely eliminated a miniscule middle class that was emerging. After flattening everyone else by confiscating their wealth, dictator Kim and his cronies will probably get to eat more beef and drink more wine every night. That is what you get when you put dictators in charge of a fiat money system. They are making Bernanke's quantitive easing (printing money) look so kindergarden. I hope those enterprising Singaporeans who went all the way to N. Korea to start a fast food joint [Link] didn't lose their shirt and pants.
Anger over North Korea's shock currency change
SEOUL, SOUTH KOREA (AFP) - North Korea's shock currency revaluation has sparked anger and frustration in the isolated communist state as citizens see much of their savings wiped out, reports and observers said Wednesday.
They said the North had tightened security against possible agitation following Monday's redenomination, with a curfew reportedly imposed in a border region and shops closed across the country during the change-over.
Media reports and embassies in Pyongyang said people had been given a week to exchange 100 old won for one new won, but the amount they can change was strictly restricted.
While the move has yet to be announced by official media, analysts said itappeared aimed at curbing inflation and clamping down on burgeoning free markets in an attempt to reassert the regime's control. South Korea's Chosun Ilbo newspaper said the main motivation "appears to be Kim Jong-Il's intention to throttle the emerging free market" before an eventual handover of power by the Korean leader to his youngest son Jong-Un. The regime has already taken steps to curb free markets. These sprang up after the state food distribution system collapsed during famines in the 1990s, but are now seen as threatening the state's grip.
Professor Nam Ju-Hong of Kyonggi University told the paper Kim had "declared war against market forces" because his efforts to control trade had failed. Analysts said authorities initially limited the total sum that an individual can exchange for new currency to 100,000 won. Because of widespread protests, the limit was raised to 150,000 won in cash and 300,000 won in bank savings, according to DailyNK, an online newspaper with informants in the North.
The official exchange rate is 135 won to the dollar but the black market rate is between 2,000 and 3,000. "Hardest hit were the emerging middle-class who had earned big wealth from the jangmadang (markets)," said Lee Seung-Yong of Good Friends, a Seoul welfare group with contacts in North Korea. "They were angry and frustrated since most of their wealth based on the previous banknotes has been chipped away," he told AFP. But Lee said he expected no organised protests given the state's tight control over society. "The main goal is to crack down on the private markets that had stoked capitalism and to place socialism back in control," Lee said. Good Friends said in its newsletter that authorities were using loudspeakers installed in towns, farms and homes to spread news of the currency change. It said major cities including the capital Pyongyang and Sinuiju on the border with China were quiet, with shops, public bathhouses and restaurants mostly closed and long-distance buses not operating. The sudden revaluation angered market vendors and others. "I worked like a dog for two months for the winter, but the money became useless paper overnight," Good Friends quoted a Sinuiju resident as saying. DailyNK said security forces mounted extra street patrols and imposed a curfew in North Hamkyung province in the northeast. "After 10:00 pm all movement is prohibited. Offenders must be strictly regulated," it quoted the curfew notice as saying. All shops, markets and stores remained closed due to a temporary ban on trading during the week-long exchange of bills, it added. Any activities requiring monetary payments were being suspended until new currency is legally circulated, Good Friends reported. "The purpose of the currency revaluation is to crush private commercial activities, considered to promote anti-socialism," said Good Friends. "Kim Jong-Il must have wanted to bring the money out of the private safes and by doing so must have also hoped to ease public dissatisfaction resulting from growing social stratification," the Korea Herald said in an editorial. "Yet, such a drastic measure amounts to confiscation and could backfire even under the ruthlessly controlled system of the North."