One day last spring, Arthur Dean, President Eisenhower's special envoy to South Korea, sat in Syngman Rhee's presidential mansion, discussing Korea's galloping inflation. Dean thought the solution was to let the hwan find its own level (i.e., free-market dollar value), then siphon away the excess hwan currency that was drowning the country. Said Syngman Rhee: "Nonsense. The best way to fight inflation is to say that the hwan is worth 180 to the dollar and then keep it there." At that time the hwan was worth less than that and fast losing ground.
The two men strolled out to a...
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