Thursday, December 31, 2009

North Korea Bans Foreign Currency

A key signal that a country is near economic collapse is when the government bans foreign currencies. It knows that its citizens do not trust its currency, and it is always a distrust for good reason.

North Korea has banned the use of foreign currency. According to WSJ:
Reports say the decree warns of severe punishment for anyone using U.S. dollars, euros, yuan and other non-North Korean currencies. Foreign currencies previously were accepted in some shops, restaurants and other outlets, particularly those catering to foreigners.

The order, issued by North Korea's state security bureau and going into effect Jan. 1, aims to "forbid the circulation of foreign currency," China's state-run CCTV television said in a brief report late Wednesday.
"Severe punishment" in these situations can often mean the guillotine. Yet, people in the underground markets will defy the order because it is the only chance they have of surviving above the bare subsistence level. It's a cruel and a very harsh environment.

Central power can really grind you.

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