As the US economic growth rate declined to 1.5% in the first quarter of this year from negative growth this year, Korea began hyperinflation with signs of stagflation due to an oversupply of chaebols and a command economy controlled by unions.
On the 26th, the Bank of Korea lowered the economic growth rate for this year to 2.7%, down 0.3%p from the previous 3.0%, and increased the consumer price inflation rate by 1.4%p from 3.1% in February to 4.5%.
On the 27th, Prime Minister Han Deok-soo started a clash with the union, telling Labor Minister Lee Jung-sik, "Make sure the Ministry of Labor has a strong union problem."
With President Biden's visit to Korea as an opportunity, Samsung, Hyundai Motor, and Lotte supplied over 600 trillion won on the 24th, and SK and LG's supply exceeded 400 trillion won on the 26th, so the total investment exceeded 160 trillion won.
The oversupply-induced economy that shakes Korea's national budget of 607 trillion won and a year's GDP of 1,900 trillion won shows stagnant exports and a command economy strategy of stimulating the domestic economy by expanding the money supply.
In the second quarter, the possibility of stagflation due to high inflation has been realized in the US economy due to continuous negative growth in the second quarter.
Inflation in the US rose from 1% in January last year to 8.5% in March this year (compared to the previous year) and to 8.3% in April, the highest since December 1981, when hyperinflation dominated.
In the early 1980s, when the economy was stimulated by an oversupply, Reagannomics implemented military increases and tax cuts to induce corporate investment as a political ideology for oversupply.
In the United States, when the inflation rate reached 13.3% in 1979 due to the oil shock and the strengthening of the international cold war, the federal funds rate soared from 12.2% to 22% from September 1979 to December 1980, and the inflation rate fell to the 4% level in 1982. Unemployment soared to more than 10%, causing corporate bankruptcies and domestic riots and international wars.
Korean companies pass on the rising cost burden to the price with the support of the government, and conflict with the union is inevitable.
Prime Minister Han led the signing of the Korea-US FTA under the Roh Moo-hyun administration and implemented the policy to abolish the political self-determination rights of the rural and fishing villages and unions, which were victims of 'a social safety net by raising taxes'.