Chapter 379
Translator: crow
Chapter Title: Korea Bubble
While America was preoccupied with its war on drugs, Pyongyang was enjoying an unprecedented boom.
“Every time I open my eyes, new buildings are going up, and the city’s getting bigger. This is what economic growth feels like.”
The Triple Low Boom had companies ramping up investments and hiring, while the government fueled a construction frenzy, creating jobs everywhere.
“Come interview with our company—we’ll give you a fat interview fee.”
“That other company gives you 100 won just for showing up, right?”
Labor shortages were so severe that businesses couldn’t operate properly across Korean society.
“This is exactly what it was like under Director Yi Seong-jun’s era.”
Older folks reminisced about the golden age Yi Seong-jun had built.
And they weren’t wrong—the Korea of the “Miracle on the Daedong” was precisely like this.
Young people were equally intoxicated by the sizzling economy.
“The late 20th century will be Korea’s era.”
Everyone believed that Korea, as a nation, was finally rising to become the world’s number-one power.
This belief wasn’t limited to Koreans.
Countries around the world saw Korea’s coronation as a matter of time.
“Buy Korean stocks! If you buy them, they moon—that’s what Korean stocks do!”
“Buy real estate too! As long as you hold, you won’t lose.”
Foreigners flocked to Korea, shopping the asset markets.
In the process, massive sums poured into Korea’s stock and real estate markets.
“How much is this even?”
With billions in lump sums flooding in daily, assets swelled overnight.
“Sitting still, and my money’s multiplying!”
Koreans cheered at their ballooning wealth.
The won-dollar exchange rate hit an all-time high.
“Whoa. Our economy’s on par with America’s? Man, I’m drunk on national pride.”
Korea’s GDP had reached near parity with the U.S.
The bubble’s illusory glamour had the private sector hooked on patriotism like a drug.
“Just one more step, and we’ll surpass America. World number one—let’s go!”
The public saw this as the launchpad to surge ahead, but Bae Seong-jun thought differently.
‘Surpass? They’re already chugging kimchi soup.’
Bae Seong-jun believed it was far too early to talk about overtaking America.
Get drunk on the bubble and splurge, and you’d end up like Japan with its yen.
Export giants were already posting deficits from the skyrocketing exchange rate.
To curb the bubble, Bae Seong-jun ordered an operation from the National Security Agency.
“So, we need to shake up the Korean economy a bit now.”
“Pardon? What do you mean?”
Agency executives couldn’t believe their ears.
It defied common sense.
Disrupting the Korean economy to prevent a bubble?
“Do as you’re told.”
From that day, the Agency launched an operation to rattle the Korean economy.
The first phase was rumors.
The Agency spread flyers signaling danger for the Korean economy.
“Think back to how the world economy bloated right before the last panic. That should tell you today’s Korea isn’t normal.”
Of course, Koreans weren’t the type to waver over mere flyers.
Next, the Agency mobilized state think tanks like economic research institutes to issue dire forecasts one after another.
Only then did people pause for a moment.
“Could the Korean economy really be in trouble? Is that even possible?”
“These are national think tanks saying it, not some randoms.”
It wasn’t unprecedented, either.
The recent economic panic was a fresh example.
“Maybe we should sit tight and watch.”
The moment people hesitated, the Agency tanked select penny stocks to jolt the market.
With massive funds behind it, the scare was plenty effective.
“That’s real. The drops are insane.”
People dumped the Agency-manipulated stocks.
The Agency swiftly scooped them up, then pumped the prices.
Up to this point, it was textbook penny stock manipulation, but next, they confessed their “sins” to the world in the form of a whistleblower leak.
Of course, without naming the Agency.
“That’s how the bosses operate. Once companies get big, they’ll spin them off and screw you over. Still buying Korean stocks?”
People shuddered at the petty tricks from Korea’s elite(?).
“Stocks are so dirty.”
Stocks that had soared wildly saw their gains slashed by the manipulation scandal.
The government also announced new policies to slow the rise.
“From now on, income below a certain threshold earned overseas will be tax-exempt.”
No taxes if you didn’t earn over a set amount.
“Invest overseas? But how’s the average person supposed to know about that?”
So the Korean government created a sovereign wealth fund.
“Put it solidly in the sovereign wealth fund and collect at maturity. The state guarantees principal.”
“Really?”
“But fees will be a bit steep.”
The Korean government siphoned hot money domestically via the fund and invested in mines and farms abroad.
Main targets: lithium, copper, and such.
This eased pressure on stocks and real estate to some degree, but couldn’t stem the won’s rise.
“The won—you just hold it, and it profits.”
The won-dollar rate climbed daily, reaching 2 dollars per won by late 1984.
For Korea, this was far from ideal.
Labor costs, already high, had become unmanageable.
“At this rate, our companies are done for.”
Korea needed a game-changing pivot.
“The answer’s simple. Shock the market.”
To drop the relentlessly rising won, Bae Seong-jun made a bombshell announcement.
“Until the won falls to 1.5 dollars or below per unit, we’ll supply unlimited won to the market.”
The declaration was tantamount to openly plotting to impoverish neighbors.
“hey! That’s not on!”
Not just America—Europe and others erupted in protest.
“A country artificially tanking its exchange rate that hard? That can’t be right.”
It could.
Korea was an interventionist state where the government actively meddled in markets.
“You try manipulating the market.”
“Yeah, not scared at all.”
True to its word, the Korean government began flooding the market with won.
No country could stop the world’s number-two economy once it resolved to dump money.
“Want to be labeled a currency manipulator?”
“Oh, wanna go another round of economic war?”
Korea brushed off America’s warnings.
“Daily supply of 5 billion sounds good.”
The bank governor was appalled, but Bae Seong-jun didn’t budge.
From day one of won supply, the rate plunged sharply.
“Koreans do what they say.”
Even in the Yi Seong-jun era, Korea had proven it kept its promises.
Currency hunters eyeing the plummeting won quickly unwound positions and fled.
The steeper the won’s fall, the faster it accelerated.
“What’s the target rate, anyway?”
To the public’s question, the Korean government replied:
“One dollar per won.”
“Are you kidding?”
Of course, reaching that was absurd, but markets took the pledge seriously.
The descent gained momentum, hitting 1.7 dollars per won in just a month.
Export firms, suffering under the boom’s rate hike, finally breathed again.
The government took further steps.
“Let’s raise rates too.”
“But sir? That’ll burden companies and households massively.”
“I know it’s a heavy load.”
Bae Seong-jun ignored objections and ordered the hike.
To burst the bubble, rates had to rise eventually.
The central bank jumped the benchmark from the 4% range to 5% at once.
“What? A full 1% hike?”
And that wasn’t the end.
“Ultimately, 10%.”
Drain funds from stocks and real estate.
That was the government line.
“At 10%, few companies could survive.”
“Time for some restructuring on the side.”
Korean firms had grown too cushy.
This was the chance for a fundamental overhaul.
Bae Seong-jun’s brutal economic policies doused cold water on Korea’s boom overnight.
The euphoria vanished in a flash.
As the economy soured, public mood soured too.
“The Republic Party was killing it—why this now? Trying to tank the elections?”
Grumbling rose even within the Republic Party.
“If we keep this up, we’ll blow the general election too.”
Yet Bae Seong-jun stood firm.
With him refusing to yield an inch, the party had no choice.
This Yi Seok-gyun regime was, in name only—Bae Seong-jun was the real boss.
“Bae Seong-jun’s a tough bastard through and through. He pushes policies he believes in to the end.”
Korea’s bubble countermeasures dropped the exchange rate, keeping the gap with America steady as before.
Still, Washington feared the “weight class” Korea had shown.
“One misstep, and Korea could overtake us.”
Briefly, Korea’s economy had topped 94% of America’s.
It fell back to 70%, but the numbers proved Korea a fully equal rival.
Dictatorship’s efficiency(?) proven in the drug war, plus overwhelming economic scale.
America realized it couldn’t view Korea’s authoritarian system as one doomed to fall.
Underestimate Korea, and they might be the ones to lose.
Korea was that dangerous a foe.
How to topple this powerhouse?
‘If we can’t hit Korea now, why not take out their economic ally, the Soviets, first?’
Topple the USSR, and Korea would be isolated, powerless.
The Soviets were already drained by the Afghan War and domestic reforms.
Now was prime time for an economic assault.
America began seriously weighing options to dismantle the Soviet Union.