This is the Cato Daily Podcast for Thursday, July 22nd, 2010.

I'm Caleb Brown.

It's perhaps not unexpected, but the premeditated destruction of private savings in North Korea has destroyed what little hope many

people retained under the totalitarian regime.

Jim Dorne, Vice President for Academic Affairs at the Cato Institute, says power grab by Kim Jean Yil's regime

has lessons for the West.

Well, the end of last year, the North Korean government decided to have a currency reform in which a hundred of the old

WAN which is the Korean currency would be exchanged for one new one. They also put a limit on the number of one that could be converted.

Initially was a hundred thousand. So if you had a hundred thousand in cash,

you could convert that into the new one at a ratio of 100 to 1, so you basically lop off 2-0.

So if you had a thousand wan, it would be worth 10. In addition, they allowed people later on, a couple days later to convert up to 300,000

1 from a savings account. But it was a very small amount and what they were trying to do

basically is try to reassert control over the markets that had developed in the

previous five years or so. They had opened up a little bit, they allowed market

exchange, they had also a thriving black market but also legal markets and

this was supplying food and other out of the blue.

Nobody expected it.

People had been saving for 10 years

to increase their style of living and they had more choices.

And all of a sudden overnight, they said within one week you had to make this conversion and this limitation.

So any money over and above that was worthless.

You might as well burn it.

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