Why markets and government policy matter

In a move that continually puts North Korea on my list of places never to visit, Kim Jong Il revalued the nation's currency, destroying wealth and inflicting uncertainty and pain on a long suffering people.

From the LA Times.

After the 1990s, when food distribution collapsed and as many as 2 million people died as a result, North Koreans began buying food privately from vendors who sold homegrown produce on the streets and at covered bazaars. By last year, the regime had rolled back many of the liberal reforms, tightening the hours of the markets and the types of Chinese goods available.The new dictates appear designed not only to put the entrepreneurs out of business but to confiscate any accumulated wealth.
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"People panicked. They had all their savings in cash because nobody trusts the banks. Many committed suicide," said Song Jung-su, a former railroad security official who defected from North Korea in 2006 but is still in touch with relatives.
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In the days before the old won lost its value and foreign currency was banned, people shopped frantically, snapping up whatever they could find: electronics, rice cookers, shoes, cosmetics, clothing and, most of all, food.
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The currency reform has had peculiar side effects. North Korea's treasury didn't print enough small-denomination notes, so shops have had to give out candy and gum as change.
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"It's always been that way. If you went to the main market and nobody was there, you knew the police had come through, so you went and found another market," said defector Kim. "They can close the markets, but they can't stop market activity."