Denninger: North Korea and Currency Devaluations

From Karl Denninger, on North Korea's 100 to 1 devaluation:

Here's what just happened over in North Korea:

TOKYO -- Chaos reportedly erupted in North Korea on Tuesday after the government of Kim Jong Il revalued the country's currency, sharply restricting the amount of old bills that could be traded for new and wiping out personal savings.

...

The revaluation replaces 1,000 won notes with 10 won notes, but strictly limits the amount of old currency that can be exchanged, news reports said.

100:1.

You had $100,000, you now have $1,000.

You had $100,000,000 (one hundred million), you now have one million.

Oh, and if you tried to cheat by taking it out of the system, only $40 of it is exchangeable - the rest is worth nothing.

Yes, this is North Korea, and Kim Jung-Il isn't exactly a nice guy.

Now let's ask the question nobody wants to ask:

Is America proceeding inexorably down a path where "the wise guys" - that would be Bernanke, Obama, Geithner - have such a plan "in their back pocket" if the dollar should happen to decline precipitously? If the market refuses to buy bonds and they can't finance spending $1.5 trillion more than they take in via taxes?

Remember, Henry Paulson had drawn up the "TARP/EESA" plan in his back pocket six months before he locked Congress in a room one dark September night in 2008 and used it to extort $700 billion of taxpayer money to bail out the banksters on Wall Street, coordinating that with $11 trillion more of Fed and Treasury "commitments." He lied about it being a "necessary immediate response" to an "unforeseen" circumstance - the truth is that he drew up his evil plan and then waited for an appropriate time when he could ramrod it through Congress under threat of martial law.

I'm sure you think it won't happen again, right? We got "change" in November of 2008, yes?

ARE YOU SURE, CONSIDERING THAT YOU ARE ON THE HOOK FOR THE $12 TRILLION THAT THEY MANAGED TO STEAL THE FIRST TIME? [all emphasis in original]...

Read it all here. You should also read the full Washington Post article on the devaluation that Mr. Denninger links to and quotes from above. As Mr. Denninger points out, the U.S. ain't North Korea. But do you trust the clowns at the helm of Obamanation to not keep those printing presses working overtime and run the dollar into the ground at high speed?

James Wesley, Rawles, who runs the excellent and popular SurvivalBlog.com website has, among other things, for some time advised his readers to stock up on non-perishable, barterable tangibles as a store of wealth, rather than holding that money in cash (or equities, bonds, etc.). (See Mr. Rawles' description of some of his barterable tangibles here). Obviously some of your money will need to remain in fiat currency to pay bills, etc., but should the dollar crash or be devalued (same effect), those tangibles can be used as barter items, or for extending Christian charity to friends and neighbors and those less fortunate.

Seems like a wise idea, and those who haven't already started doing exactly that may wish to consider doing so with at least a portion of your funds ASAP, as time is of the essence. Note that barterable tangibles means items like essentials, tools, and other useful items. It does not include crap like big screen flat-panel TVs and other useless consumer entertainment electronics.

By the way, at least a couple of readers of this blog have lived through a currency devaluation firsthand. For those who have never lived through a currency devaluation, understand that it just happens. One day your money's worth x, the next day it's worth x/n (relative to other currencies; in the North Korean example above, to a "new won" that's now the new official currency, with limits on the amount that you can convert from old to new), where "n" is some (typically integer) value greater than 1. Unless you have inside information, the first time you'll learn of it will be via the news. If you haven't already prepared for such an eventuality, it will be too late at that point.