Jong-Eun Needs Uncensored Communication and Price Discovery to be Economic Giant

The WealthCycles Staff

It is possible with the same freedom of choice in money that U.S. citizens struggle for, North Korea could meet the new ambitious goals laid out by its new young leader, including to become an “economic giant.” As the U.S. already achieved this goal decades ago, it is worth considering how it was done: A foundation of sound money was the most important factor in both U.S. development and now its degradation. As F.A. Hayek would say to the North Koreans:

All those who wish to stop the drift toward increasing government control should concentrate their efforts on monetary policy

Jim Rogers, a fund manager with a classical economics perspective, often speaks of how quickly lines on a map change, and he has expected good to come for the Korean Peninsula. In many ways, Rogers has been right again; good has come to pass.

“[The North Korean] hosts seemed encouraged by recent statements,” according to Bill Richardson, former governor of New Mexico, who travelled to North Korea with Google’s CEO Eric Schmidt. Richardson is referring to the desire to further communications and trade between the two Koreas, as expressed by Park Geun-hye, the new president of South Korea.

Kim Jong-eun, North Korea’s new leader, addressed citizens, and “our compatriots in the south,” for the first time since the death of the country’s founder, Kim Il-sung, in 1994, and it was great news. The Swiss-educated son had a plan:

[The country] should wage an all-out struggle this year to effect a turn around in building an economic giant and improving the people’s standard of living.
The past records of inter-Korean relations show that confrontation between fellow countrymen leads to nothing but war.
An important issue in putting an end to the division of the country and achieving its reunification is to remove confrontations between the north and the south.

If there is follow-through with respects to ending further naval provocations, and Ms. Park follows through with a summit, trade could indeed blossom between the nations.

But what about North Korea’s Main Street, the individual people? Can they begin to trade without fear? Should capitalism take natural root in the northern peninsula, a mandarin-style agricultural revolution is most likely, as guidance from Beijing has been ongoing, and there have been rumors of North Korean farmers selling 30% of their crop rather than handing it all in to the planners.

As WealthCycles readers know, gold and silver coins are the only safe form of savings possible. This is because all other forms of money (with perhaps the exception of Bitcoin) can be increased in supply, taxing all who save in the medium, typically paper banknotes, by means of debasing its value. According to South Korea’s central bank, “gold is a physical safe asset,” for all Korean families and their children’s savings; gold should be the bedrock of household savings.

So does the young one have it in him? Kim was educated in Switzerland, of all places, where one learns from the corners of classical economics and history that gold is wealth, is static in its purchasing power, and therefore acts as an excellent “measuring stick” in economic calculation. Chosun media reported that “a mysterious agency known as Room 39 manages the North Korean Treasury, and the People's Armed Forces are spearheading the exports of gold,” according to its source in China. So Mr. Kim very well knows gold is accepted as money by many all around the world, exporting more than 2 tons to China.

It is possible that Mr. Kim will show he knows better than South Korea when it comes to the freedom of choice when it comes to money and what that does for economic growth and efficient allocation of scarce resources: labor, time, capital, and raw materials.

So far, the opposite has been the case, and this claim flies against the current party line. However, apolitical deal in which the North Korean leader simply accedes power to other planners seems unlikely. The emotion may be, “if I set the people free, I want them to be truly free, not under a new master.”

There is much good news in the Korean Peninsula recently, so it is easy to see why the Google delegation’s hosts were positive. The country's recent rocket launch on December 12 “captured the imaginations of the global media and gave North Korean morale an interstellar boost,” as Vice wryly put it.

Despite rumors that the satellite, after making it into orbit, hasn’t been functioning, Kim still felt emboldened enough to let the metaphor of space exploration underscore his rhetoric for a year of new frontiers back here on Earth.

In a Huffington Post article, Jonathan McDowell of the Harvard-Smithsonian Center for Astrophysics notes that, “for North Korea, it lets them say to their people that they are an advanced 21st century country, although they can't feed their people.” The idea that planners are responsible for “feeding their people,” something the U.S. planners arguably can only do by loaning more cash into existence, with one in five Americans now onfood stamps, is a foreign one.

Rather, people feed themselves, and the few times humanity has tried it the other way (to any significant degree) it could hardly be stated that it actually was done, as so many starved in the process. (You didn't grow that!) Instead, leaders are responsible for the set of tasks their masters laid out for them, and in the case of the federal U.S. government, those responsibilities are found in Article 8, none have anything to do with “feeding.”

The problem of the U.S. reverting back to a fully “socialist economy” as France and North Korea blatantly call their economies, in which planners forcefully organize society (rather than society being organized by free prices and free people), is even more apparent when one considers the government employees and military are also fed by issuing debt and borrowing banknotes into existence (with the principle, plus interest due back to the owners of the banknote monopoly).

“Despite not having access to the internet, there is a voracious tech and programming culture [in North Korea], where digital media is exchanged on highly sought after USB-sticks,” the more fortunate have tablets, reported Vice. “North Koreans really do want to connect with the outside world—when I was last there at the end of 2010, a North Korean told me, ‘Yes, I've heard of the internet. And Google. I think if we had it, it could save our country.’”

During his recent visit to the nation, Google’s Schmidt was received by the North Korean public as a “rock star,” according to Richardson, and Schmidt made it clear that he would agree with that particular North Korean’s sentiment that “it could save our country.” Yet the U.S. exports censorship hardware to regimes globally, assisting in the abuse of basic human rights.

We have shown strongly that we also agree with the fact that “it could save our country,” however, of course, from a different perspective, reporting on the threats to freedom and humanity here, and again in our Internet Censorship Power Push - Stop CISPA PIPA SOPA.

Yet again, there is great news: Jay Rockefeller, the force behind many of the Internet censorship attempts, announced that he would not seek another term after his current term ends in 2014.

While Schmidt did not have anything particularly poignant to say during his recent North Korea trip, to his credit he did oppose the PIPA and SOPA legislation:

…would require (Internet service providers) to remove URLs from the Web, which is also known as censorship last time I checked.

North Korea's ruling party daily paper, Rodun Sinmun, launched online, supposedly along with YouTube and Twitter accounts. The site shows the socialist education system having similar length and centralized curriculum nudging as the U.S., for a compulsory 12 years.

Despite being very different nations today, it appears the U.S. and North Korea are headed towards convergence. Now for the obligatory satellite launch pictures, starting first with the moment of anticipation in what can only be described as North Korea’s “Houston:”

FYI, this man's last name is Kim, not Jong-Eun. Therefore the title of your article should be "Kim Needs Uncensored Communication and Price Discovery to be Economic Giant."

Whilst you recomend holding gold and silver to protect savings. Do you recomend that we do anything else? For example what is your view on stock piling food? Is that too extreme?

Have you ever thought about having a forum or a place where your members can post. This would allow us to discuss current events rather than just being able to post comments at the end of articles. I feel that this would be a great addition to your site and would help build more of a community.

Food security is a good thing any time. Natural disasters, personal employment changes, or economic collapse all are easier to face possibilities with a good supply of food storage. We like the Emergency Essentials company.

I, for one, would like to have a place where "customers" can carry on a "discussion".

Currently, I'm interested in hearing ideas as for why gold seems to be stuck right where its been for a numbers of months now, despite the shenanigans of the Feds.

Thanks for the opportunity to be heard on this issue.

Joe Reisinger

Hi Joe,

Thanks for writing, sounds like you mean why isn't gold headed lower, considering unlimited firepower.

Many feel the price rise has been tempered all along the way, "managed" and "allowed" higher. This could be so gold is able to better play a role as an asset in finance. Here is one (of the hopefully many) monetary options possible (OMFIF).

Price support in gold is simply due to sellers and buyers individual expectations about both the future value of gold, and the future value whatever it is being traded for (usually fiat currencies, such as banknotes, which are the liabilities of the issuing bank). 

They may be thinking:

New gold supply is tight, and more are demanding gold globally

Fiat is fundamentally falling, due to printing, due to deficits

Lastly, technicals matter little, but the present day position of gold is on support, and a battle is being waged to prevent breakout and instead prompt breakdown.

Which would be awesome, because so many more people can save in even more physical, and those who are already in the market can properly put away newly earned paper.

Community is being built into our version2 web presence, hang with us and enjoy the high-test content till then...

We do recommend reducing expenses as far as possible, as soon as possible, to ensure maximum savings before the big storm.

We do recommend planning for a surprising rise in food costs, and potentially even periods of empty shelves.

More to come on these topics soon!

This morning: FABER: `PLACE FOR KEYNESIANS IS NORTH KOREA'

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