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From ABC News
North Korea's stable exchange rates confound economists
It's a question that nags at North Korea economy watchers: How has the country been able to maintain stable exchange rates — and avert hyper-inflation — despite intense sanctions, political tensions and a swelling trade imbalance?
In a nutshell, North Korea buys a whole lot more than it sells to China and, because of the sanctions, is doing hardly any business with anyone else. Since no one in their right mind would accept the internationally worthless North Korean currency for any significant trade deal, North Korea must be burning up its foreign reserves. And when a country does that, prices generally start to rise — often dangerously so. All of which should be reflected in its exchange rates.
So what gives?
Understanding what's going on with the North Korean economy is essential for negotiators trying to gauge how seriously leader Kim Jong Un is about giving up his nuclear weapons and whether sanctions are actually what got him to the negotiation table, as many in the U.S. government have suggested. Exchange rate stability would normally suggest otherwise. But does it?
COMMENT:-
There are a couple of paragraphs about half way through the article which could well provoke some thoughts if you substitute "the United States of America" for "North Korea" (and those paragraphs have absolutely nothing to do with politics, elections, Ms. Clinton, Mr. Obama, or Mr. Trump).
See if you can find them.
North Korea's stable exchange rates confound economists
It's a question that nags at North Korea economy watchers: How has the country been able to maintain stable exchange rates — and avert hyper-inflation — despite intense sanctions, political tensions and a swelling trade imbalance?
In a nutshell, North Korea buys a whole lot more than it sells to China and, because of the sanctions, is doing hardly any business with anyone else. Since no one in their right mind would accept the internationally worthless North Korean currency for any significant trade deal, North Korea must be burning up its foreign reserves. And when a country does that, prices generally start to rise — often dangerously so. All of which should be reflected in its exchange rates.
So what gives?
Understanding what's going on with the North Korean economy is essential for negotiators trying to gauge how seriously leader Kim Jong Un is about giving up his nuclear weapons and whether sanctions are actually what got him to the negotiation table, as many in the U.S. government have suggested. Exchange rate stability would normally suggest otherwise. But does it?
COMMENT:-
There are a couple of paragraphs about half way through the article which could well provoke some thoughts if you substitute "the United States of America" for "North Korea" (and those paragraphs have absolutely nothing to do with politics, elections, Ms. Clinton, Mr. Obama, or Mr. Trump).
See if you can find them.
