Two interesting articles from Rolfe Winkler. The first, involving North Korea, is indicative of what happens in an hyperinflation, including the financial destruction of savings. Interesting reading if you are naive about hyperinflation and devaluations. I am not suggesting that the US is anywhere near such action, although a few have suggested such an “Argentine solution” to our problems. An important point is that if such an event were ever to happen, it would come without warning.
The second article is curious, involving a postponement in publishing the financial statements for the US government. Whether this is just ineptness or something else is unknown. For those who have never looked at US government financial statements, link to those below even though they are a year old.
Posted by: Rolfe WinklerFrom Richard Lloyd Parry, writing for the Times of London: North Koreans in misery as cash is culled
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.
“Loud sounds of weeping in every house have not ceased since the news was released,” a South Korean website quoted an inhabitant of Sinuiju, a city on the border with China, as saying. “Weeping and fighting between couples has not stopped anywhere. The atmosphere of the city is terrible now.”
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In the capital, Pyongyang, yesterday only the few shops and restaurants permitted to trade in foreign currencies — patronised by the privileged elite and the city’s small foreign population — were open for business. All other enterprises and services based on cash, including markets, long-distance bus services, barbers’ shops, saunas and bath houses, were suspended until the revaluation of the won is completed next week.
According to the article, this is the first time North Korea has revalued its currency since 1959.
Treasury delays release of U.S. government’s GAAP financials (fms.treas.gov) Normally this report is released in December, but the 2009 report has been pushed back two months apparently. Could be a good reason. Waiting for a call from these folks…
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