North Korean won and economic calculation

North Korean wonA friend of mine recently sent me this Reuters article by Daniel Tudor and James Pearson about the illegal but tolerated market economy behind North Korea’s own “iron curtain.” Among a few of the topics covered in the article (and the book by the same authors) they reveal several of the North Korean government’s attempts to restrict voluntary trade in North Korea via manipulations of the won (KPW) currency. What I found interesting was the discrepancy between the official government-set exchange rate (only 96 KPW per 1 USD as of the time the article was published) and the market exchange rate (closer to 8,000 KPW per USD, again, as of the date the article was published).

Another case, according to the authors, involved the government canceling the last two zeros of every bank note. The government did this by requiring citizens to trade their 1,000 won notes, for example, for 10 won notes. North Koreans were allowed only one week to make the trade. One of the catches was that the government would only exchange a maximum of 100,000 won (about $30-40 at the time). The result? The savings of North Korean people were destroyed instantaneously. Remaining monetary notes stored away in savings became worthless because by law, no merchants would be allowed to accept them. For a North Korean to demand that the government trade in more than the 100,000 won maximum would likely result in that individual being subjected to intense questioning about any black market activities he or she may be involved in. “Where did you get this extra money?! You must be doing something illegal! Off to the labor camps for you!”

Obviously, making any rational economic calculation with these money prices is difficult to say the least. And in an oppressive regime that does everything it can to discourage market activity, that almost seems to be the government’s intention. Under these conditions, if there is any rational economic calculation at all it is only thanks to the black market! If people cannot rely on money to not lose its value drastically overnight, they will try to sell it as soon as possible for other currencies, consumer goods, etc. It is for this reason, that North Korean people (illegally) trade US dollars and Chinese yuan on the black market. Similarly, when people notice the discrepancy between government-set exchange rates (which are only government attempts to conceal just how bad inflation is) and market exchange rates, they will choose to buy and sell at market rates — not government-set rates.

Related note: Inflation also has a strong tendency to encourage spending and consumption over saving. During hyperinflation in Brazil in the 1980s and early 1990s, Brazilians frequently ran to the markets to sell their money (by buying goods and services) as soon as they received their paychecks. Holding onto their money for even an extra day often meant that their money’s buying power decreased dramatically. The increase in demand and seller expectations that demand would continue pushed prices up even further.

The Reuters article gives an example of a basketball for sale at a shop in Pyongyang for 46,000 won. At 96 KPW to 1 USD, the price of the basketball is US$479.17. Obviously, nobody pays this amount of money for basketballs under normal circumstances in any country. Now, by contrast, if the market rate is about 8,000 KPW for 1 USD, we are only talking about US$5.75. But even at this price, one would imagine that most poverty-stricken North Koreans without political connections would prefer instead to use their money to purchase goods and services that are more essential to maintaining human life. To switch from economics to psychology for a moment, I’m referring to goods and services that are able to serve functions further to the bottom of the triangle in Maslow’s hierarchy of needs (i.e. physiological needs such as water and food).

My curiosity led me to check to check the exchange rate between KPW and USD. Here below was the rate shown on 16 April, 2015. I updated the page 2 hours later, and the rate was still exactly the same. For any other currency (belonging to nation states with more formalized market economies), is able to provide updated rates as they fluctuate throughout the day. This is the relevant portion of the screenshot I took from the page on that date:'s exchange rate for North Korean wan (KPW) on 16 April, 2015




Today, two weeks after getting the above exchange rate, reports it to be 124.753 KPW for 1 USD. (That’s “one hundred twenty-four point seven five three” for my friends from countries that have the opposite usage for commas and periods than that of the United States — not “one hundred twenty-four thousand seven hundred fifty-three”). My guess is that is reporting North Korean government-announced exchange rates since 124 to 1 USD doesn’t seem too high relative to exchange rates with many other countries.

I also checked the rate using “Currency Converter HD” iPhone app, which is the app I rely on for all other currencies as I travel, and found this very different exchange rate. Today again, two weeks after I first checked and finally got around to writing this blog post, the app still says that 1 USD is valued at 900 KPW. I also find it difficult to believe that the going exchange rate is perfectly divisible by 100!

Currency Converter HD for iPhone's exchange rate for North Korean wan (KPW) on 16 April, 2015








As of 1 May, 2015, Google reports the same exchange rate as my iPhone app:

Google's exchange rate for North Korean wan (KPW) on 1 May, 2015

So what is the truth? Is the going market rate in North Korea for 1 USD closer to 96 KPW? 900 KPW? 8,000 KPW? It’s not easy to know.


More on economic calculation:

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Why audiobooks can make your whole life better

“It’s not an accident that successful people read more books.”
-Seth Godin

I must begin by asking the question: If you could increase your book learning from say, 2, 3 or 10 books per year (or however many you are reading now) to 20 or 30 books per year, would you? If you could distinguish yourself among your peers and become the most well-read, while using less effort, would you do it? If you could easily breeze through books on difficult subjects rather getting frustrated and putting them down, would you do it? Could these things not better your life?

Audiobooks have made my whole life better. No exaggeration! At the age of 25, during a study abroad I began my first audiobook on Audible format. Before that time I had always been an autodidact (self-learner) for many subjects, so books were definitely a part of my life before then. However, I did not have the habit or the know-how to go through endless amounts of books like I do now. Of course, anyone that has gone through a reading-intensive degree program has had to push their reading limits. In my graduate program I had to read, on average, about one full book per week. I’ve been there! Unfortunately, the books I was required to read in graduate school were rarely available on audio, so I found myself at coffee shoppes and 24-hour restaurants (anywhere I could find caffeine) until the early hours of the morning — night after night. Needless to say, this is not a highly-efficient method of acquiring book knowledge. I must admit that despite no longer being a university student I still spend several nights per month reading at Denny’s restaurant until 2am —  and often 5am, where I have my own special table on the other side of the restaurant away from distractions from other customers. You don’t have to do all this, and even if you do, audiobooks will greatly enhance your learning.

As I have posted previously, thanks to audiobooks, I can go through about 30 books per year. A little more than two per month or so (24+ per year) of these are audio format (mostly books from Audible on my iPhone) and the other 6-10 are books in print. Personally, my reading is geared toward acquiring new skill sets and learning (not just entertainment), therefore my audiobooks and print books are almost exclusively non-fiction. (It is my opinion that life is just too short to read fiction; however, I do make very rare exceptions for books that come highly-recommended).

Here are some of the reasons why audiobooks have spawned a reading revolution in the people I know that have embraced them (myself included):

  1. You will enhance your education: Your education is everything. Hopefully I don’t have to convince you of that. Read on…
  2. You will increase your productivity: Time that was previously non-productive (driving in your car, riding your bike, walking/commuting to work, etc.) is now productive learning time. Anytime I’m in my car, I’m listening. When I’m on airplanes, I’m listening. When I’m riding my bike or running/walking 2-3 times per week around a lake nearby where I live, I’m listening. And when I’m sitting in my living room or relaxing in a coffee shoppe or airport lounge, I’m reading (the old-fashioned way) print books that have not been released yet on Audible.
  3. You will breeze through difficult subjects: For all those books that you wanted to read, but they were a bit over your head, you no longer have an excuse. You no longer have to doze off, staring at the same paragraph until you lose all interest. Listening on audio pushes you through the boring parts. If you want to go back and listen to the last few “paragraphs” again, you can just click the “Go back 30 seconds” button if you’re using the Audible app on your smartphone. Or, if you prefer, you can allow the narrator to continue speaking until the audiobook gets more interesting again.
  4. You will increase your reading speed: If you’re a slow reader or not a book reader at all, you no longer have an excuse. Get audiobooks. My father was not much of a reader until I gave him his first audiobook on Audio CDs. He was able to listen in his car (which he used for work). He became instantly hooked, and in about a year and a half he went through over 40 books on Audio CD! With audiobooks, you can listen as fast as the speaker can talk. And if you use Audible on a smartphone to listen to books, like I do, you can even adjust the narrator’s reading speed to 0.75x, 1x, 1.25x, 1.5x, 2x, 2.5x and 3x, respectively. Personally, I go through most audiobooks at 1.25x. For boring and unimportant parts of audiobooks, I sometimes speed through at 1.5x. Apparently, scientists claim that most people “can understand quickly spoken passages of natural speech” at up to 500 words per minute. But since I’m paying for my books (and thus, my education), I prefer to take time to absorb the content.
  5. You will still be able to take notes: I take detailed notes on almost every page of print books and write even more notes on the inside flap. (Example 1, Example 2). Luckily, you don’t have to sacrifice your methodology by switching to audiobooks. If you listen to audiobooks using Audible’s smartphone app, you can take notes at any reference point in the audiobook. That way, you can later scroll through all of your notes, and when you select any of them, the Audible app will resume the audiobook at the exact point in which you made the note.
  6. You will pay very little: If you use Audible, you can sign up for Gold and Platinum Memberships to save money. Personally, I pay $14.95 monthly for the Gold Membership, which gives me one credit per month (and buys me almost any audiobook on the website – no matter the price) and 30% off of all audiobooks. Furthermore, the Gold Membership gives me access to great discounts throughout the month, which I receive from Audible’s newsletter, and I use them! In the past there have been a couple of instances in which I needed to catch up on audiobooks that I had already purchased and did not wish to be billed yet for new books. I was happy to learn that Audible had an option to freeze my membership without canceling it for three months. During those three months I was not billed the $14.95 for new credits, but I still had access to the 30% discount if I wished to download any other audiobooks. 

Downsides to audiobooks:
As a believer in full-disclosure, I must mention that there are still, in my opinion, four downsides to audiobooks; so I will identify them:

  1. The first is that most people (myself included) tend to remember more when they read the traditional way. Most people tend to be visual learners. C’est la vie. Nonetheless, even if you are a fast reader, being empowered to use all those otherwise mentally non-productive hours of driving in your car, exercising, etc. to enhance your learning by listening to audiobooks makes the adjustment well worth it many times over! There is such a high opportunity cost if you continue to only read books in print. Think of all the books won’t read!
  2. The second downside to audiobooks is that the references/sources are often not given. When recording, the narrator reads the print version of the book as if no reference was even given (unless the author included the reference into wording in the paragraph). Honestly, as much as I love audiobooks, this seems like plagiarism to me, and in my opinion, books on Audio CD format should include a .docx or .pdf file with references on one of the CDs, and Audible/iTunes books should have such a file available for download as well. But even with this hurdle, I have still been able to find references when I need them by going to and locating the book I am listening to on the Google Books database then searching for three or four keywords that were mentioned in the audiobook around the time of the needed reference. If I get the keywords right (spacing and everything), Google Books brings me right to the page that I was listening to right on my web browser. I find the footnote number and chapter then refer to the book’s References section in the last few pages, and there’s my reference. Similarly,’s Look Inside feature allows you to browse through the books in a similar way. Therefore you can also look through the book’s references using this website.
  3. The third downside to audiobooks, in my opinion, is that audiobooks do not always come with all the images containing supporting graphics, charts, etc. that traditional books do. This is annoying — no doubt. There are a few ways to find these images when you need them. If you are listening to an audiobook on Audio CDs, sometimes the first CD will contain images; just look at the CD case/box to find out. If your audiobook is on Audible, thankfully, all or most of the images are often available on the website for download in .pdf format (but not always, unfortunately). When they are available I always download the .pdf files and save them onto my iPhone. If I want to refer to them while listening to the audiobook, I can open the .pdf from the Documents app (made by SavySoda™ and available on iTunes). And of course, alternatively, you can still refer to Google Images or Amazon’s Look Inside feature to scan through books to find the image.

Maximizing your learning experience:
I am able to maximize my learning experience by also purchasing many of the books that I listen to on audio in print. If the book covers material that is particularly important to my long-term goals, then I take notes in the print book after I’ve identified something from the audiobook that I want to highlight. This is a perfect solution to the previous four aforementioned “downsides to audiobooks.” With this technique these “downsides” are no longer downsides at all.

Next, in order to really immerse the book material into my long-term memory I almost always search YouTube for presentations by the author on the book’s topic. These days when an author goes on book tour and presents on the book topic, fortunately, those presentations usually make it YouTube. Often they appear as TED Talks. Listening to a presentation by the author is like getting all the best highlights of the book presented in a well-organized outline form. It’s beautiful.

And lastly, I search for documentaries on the book topic. As documentaries are audiovisual, watching them helps commit the content to long-term memory and provides depth since the documentaries usually present the content differently than the book, so you think about the information from different perspectives.

With listening to audiobooks, taking notes on the print versions of the book, watching presentations given by the authors and then watching documentaries on the subject you get a very well-rounded education indeed. This might possibly seem like a lot of work. But to me, this way of doing things is both easier and more efficient than trying to read cover-to-cover book after book. The traditional method of reading alone is only a crutch for most people because it limits their learning speed to their reading speed; that is, they read slowly so they learn slowly as a result. Thanks to audiobooks and the techniques I’ve mentioned here, a slow reader like me can go through about 30 books a year – and not by merely skimming books then claiming I “read” them like many people do. With audiobooks and the techniques I’ve explained in this article, I really do go through the books cover-to-cover and then some!

As you see from the previous section, the pros far outweigh the cons (in my opinion), and the cons still have easy workarounds. So go to and look for that book that you always wanted to read and never did. Get going. Become more well-read than all of your peers. Kick ass; take names. Enjoy your enlightened new life.

Find the best books via my mailing list:
Join me in my quest for knowledge! No spam; that’s my promise. I send emails out once every two months and then one more email in January of each year announcing my favorite books of the previous year. If you are not yet much of a reader but would like to challenge your thinking in new ways, my reading email list is a great way to get started. To give you a general idea of what type of books you will find in my reading list, below are a few from the past couple of years from of the most common genres:

  1. business and economics: Josh Kaufman’s The Personal MBA, Henry Hazlitt’s Economics in One Lesson,
  2. negotiation and influence: Robert Fisher and William Ury’s Getting to Yes, Robert Cialdini’s Influence,
  3. human behavioral sciences: Daniel Kahneman’s Thinking Fast and Slow, Steven Pinker’s The Blank Slate,
  4. philosophy: John Locke’s Second Treatise of Civil Government, Thomas Sowell’s A Conflict of Visions,
  5. sales and marketing: Bob Burg’s Endless Referrals, Ryan Holiday’s Growth Hacker Marketing,
  6. history: Robert Lacey’s Inside the Kingdom, Paul Kennedy’s The Rise and Fall of the Great Powers,
  7. foreign policy: David Sanger’s Confront and Conceal, Henry Kissinger’s On China
  8. public speaking and writing development: Jeremey Donovan’s How to Deliver a TED Talk, William Zinsser’s On Writing Well

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I happen to be a fan of property rights, individual liberties, free markets and the rule of law. As such, that tends to come out strongly from time to time in some of my book reviews. I’ve never had complaints from any of my subscribers, but if this bothers you, this mailing list may not be for you. And worst case scenario, if you subscribe and then decide you don’t want to receive them anymore, unsubscribing consists of simply clicking a link at the bottom of my emails.

See also:
How to acquire fluency in a foreign language as an adult