Source – cluborlov.blogspot.com
– “…The collapse started before the coronavirus. The collapse really started unfolding as early as 2008, and all of the methods used to recover from the financial collapse of 2008 have been failures. They have been efforts to delay, rather than recover….None of the problems have been solved, and so in 2019 the crisis started to unfold….very seriously during the banking crisis, in August 2019, the so-called ‘repo’ crisis, when suddenly banks started to refuse US sovereign debt as collateral for overnight loans, and the Federal Reserve had to basically step in and print money to cover this massive shortage”
Why Collapse of the US is inevitable while Russia will be spared – By Dimitry Orlov
Sputnik: Mr. Orlov, thank you very much for this interview. Today we want to discuss your newest book, Die Lehre vom Kollaps: Die fünf Stufen des Zusammenbruchs und wie wir sie überleben
[Rough translation: The Lesson of Collapse: The Five Stages of Collapse and How to Survive Them]
It’s [newly] published in Germany by Westend Verlag and Fifty-Fifty Verlag. But before we start, maybe some of our audience, regular listeners and readers may not know you yet. Could you give us a brief and short view of your life as a writer, and also, what’s your approach, what’s your philosophy?\
A: I was born in Leningrad, which is now St Petersburg. My family moved to the United States when I was a teenager. I earned my degrees in the United States in computer science and in linguistics. I worked in a lot of high tech companies; I worked in high-energy physics for a long time.
Around 2005 or 2006 I started writing on the subject of the upcoming collapse of the United States.
I spent quite a lot of time in Russia during the late 1980s and 1990s and watched first hand the collapse of the USSR. This allowed me to gain a perspective of what the collapse of the United States would look like when it comes, and so far everything that I have predicted has been coming true more or less on schedule, although it is very difficult to make predictions about timing.
And so I’ve been devoting a lot of effort to writing essays and books, and giving interviews and talks on this subject that’s becoming…now that the collapse of the United States is unfolding before our eyes, there’s quite a lot more interest in my work than before.
Q: So later we will have a look into your book and will also discuss the USA in detail, but before we discuss this, the corona [virus] crisis comes [to] mind. This virus which holds mankind hostage – I think your book was written before this crisis, but you also mention the threat of a virus in general. I would like to know from you, is the coronavirus a collapse-maker, a crisis-maker according to your model, your research and your books?
A: Well, not at all, actually. The collapse started before the coronavirus. The collapse really started unfolding as early as 2008, and all of the methods used to recover from the financial collapse of 2008 have been failures. They have been efforts to delay, rather than recover, or prevent, or anything like that. None of the problems have been solved, and so in 2019 the crisis started to unfold for real, and first became visible in the dramatic decreases in industrial production in many countries, including Germany. And then it really showed up very seriously during the banking crisis, in August 2019, the so-called ‘repo’ crisis, when suddenly banks started to refuse US sovereign debt as collateral for overnight loans, and the Federal Reserve had to basically step in and print money to cover this massive shortage.
And so by the time the coronavirus surfaced, the economy in the United States and many other countries was already in full-blown collapse. But the coronavirus turned out to be very useful in order for politicians to mask what was really going on, and blame it on this virus, which was really a rather innocuous virus compared to some of the previous ones. This is not the Spanish ‘flu; this is not the smallpox pandemic. This is not the black plague. This is just something basically a little bit more serious than the common cold. And yet the economic destruction that it is being blamed for is absolutely extraordinary.
Q: So if I understand you right, Mr. Orlov, it’s not the coronavirus, it’s more the economic and financial markets which make the five doom stages happen?
A: Well, it can proceed in various ways. I started out thinking along the lines of the Soviet collapse, where basically the first symptoms of the collapse were financial. The Soviet Union was basically bankrupt, financially bankrupt, and that caused a cascaded failure from finance to economics to politics and partial social collapse. So that is the cascade that I thought would be most likely, but in the case of the United States, as I have eventually realized based on how the collapse of the United States is proceeding, in the US it starts with social and cultural collapse, and then proceeds to political collapse, and the last thing to remain standing is the finance system, which is a kind of Potemkin village, if you will. It’s basically pure fluff; it’s based on nothing but the Federal Reserve printing press at this point.
Q: Do you live in the USA, or both in Russia and the USA?
A: Part of my collapse preparedness was to move from the USA to Russia about 3 years ago, so now I live in Russia.
Q: [I would like to ask you] …are you a prepper? Are you prepared for a big crisis like shortage of food or lack of money supply? Do you see such things in Russia? I don’t think you see it but…Do you understand my question?
A: Yes, I do. I saw the collapse coming and so I moved to Russia where such collapse is extremely unlikely.
Q: I would like to know whether you recommend gold or silver, and whether people should invest in these metals?
A: It may make sense to some people. Or not. It really depends on one’s situation. Overall, I think that precious metals will play a great part in international trade once faith in fiat currencies is sufficiently disrupted. I think that international transactions will have to be backed by gold in some way, but I don’t know what that really means for retail investors. It may be a way of preserving one’s money when hyperinflation arrives in the countries where there will be hyperinflation, of which the United States is the prime candidate.
Q: So now let’s look into your German book, Die Lehre vom Kollaps: Die fünf Stufen des Zusammenbruchs und wie wir sie überleben.
You created a model which consists of five stages. So first the financial stage is coming, afterwards the commercial collapse, then a political collapse, [with] social and cultural collapse in the end. Could you elaborate on your model for our audience?
A: Yes. Each of these stages of collapse can be seen as collapses in faith in the status quo. So financial collapse comes when various types of debt instruments turn out to be worthless; promises made and deals struck have to be declared void because of various force majeure circumstances.
In terms of commercial collapse, mostly that has to do with supply chain disruption, where various types of manufacturing processes cannot go on because [of] various parts not being delivered on time. We’re seeing some of that now because of factories and production being shut down because of the coronavirus.
Various other types of trade disruption are likely to exacerbate this process. And then political collapse comes from the inability of governments to spend money because once commercial collapse occurs they do not have access to the tax revenues that they need to keep government going.
Social collapse occurs when various types of social organizations that try to keep people alive, basically, once the government can no longer provide. Once those start to fail people start to only look out for themselves and their families. And then cultural collapse comes when the families themselves crumble. Adults disperse. Each person tries to keep [him or herself] alive, and at that point people stop resembling people.
Q: So Mr. Orlov, you mentioned [already] your home country, Russia, and the collapse of the Soviet Union. In your book you write something very interesting: in Russia the process [was] stopped on Stage III and then it was reversed.
Nowadays, with President Vladimir Putin, trade is booming and in 2020 Russia is practically free of debt. Could you comment [on this]?
A: Yes. The Soviet empire was never really an empire [in the strict sense] because empires generally profit from their colonial possessions. Instead, Russia had dependents that it lavished with all sorts of things: built factories for them; created medical systems; built schools, hospitals, universities, railroads, hydroelectric dams, you name it. At [Russia’s] own expense. This really deprived Russia of a great deal and made the Russian people much poorer than they otherwise would be. And strangely enough, after the Soviet Union collapsed all of these dependents were basically told to go their separate ways. If you look at how they’re doing now, socially, economically, politically, they’re doing much worse than they did under the Soviet Union. Some very dramatically so. So, for instance, Soviet Georgia was very rich, and now Georgia is one of the poorest countries that you can mention. The Ukraine was once the industrial powerhouse of the Soviet Union. Now it has zero industry left and its population is collapsing.
On the other hand, the Russian people have generally benefitted from being deprived of these dependents, not having to take care of them any more. And so as a result of that the Russians themselves have become much richer and more prosperous.
Q: Let’s look at your second home country, the USA. You write in your book that in certain parts of the US, [for example] Flint, Michigan, or Baltimore, Maryland, you can already see the collapse happening. Can you explain this?
A: Yes. These cities are largely destroyed. They have huge homeless populations; they have massive problems with drug addiction. The level of illiteracy is around fifty percent – [that’s] adults who cannot read or write, or use arithmetic. The living conditions are absolutely deplorable. There’s a huge problem with heating during the winter, so a lot of people, especially older people, freeze to death, and the services that are available are worse than what you’d have in many very poor countries around the world.
So the United States has pockets of [relative] prosperity still, but then it has very large pockets of absolute poverty, destitution and hopelessness.
Q: You mentioned already the [Fed? Unintelligible at 13:12] in your book. These credit loans which have….the interest rate is very low…like zero? You have these, then you have a financial market under pressure, and you have also the social riots in the US. Do you see a collapse in the US coming in the next few months? Maybe because [also] of the political, social and financial situation?
A: I don’t think that the United States is on a path to any sort of recovery at this point. I think that all of the problems that are surfacing in the United States now will get worse over time. I think the overall trajectory of the United States is towards political dissolution because politically the country is so hostile, so hostile in terms of just the human environment. People no longer know how to get along with each other. And so I think that political dissolution of the United States is, over time, becoming more and more an inevitability.
I don’t know exactly when this will happen. The most fragile part of it is the entire financial realm which is currently being completely kept up in the air by the printing press, by printing trillions of dollars. The level of printing is on the level of the Weimar Republic in Germany, [or of] Zimbabwe.
Recently it has turned out that commercial leases are in arrears because companies cannot pay for the space that they’ve leased, and the solution seems to be to print half a trillion dollars. And that seems to be the answer to every question in the United States right now. Unemployment? Print a trillion dollars. Homelessness? Print a trillion dollars, etcetera. And before too long it turns out that the amount of money that’s awash in the economy is much greater than the amount of product that can be purchased by it. And in parallel with that, countries are abandoning the US dollar in international trade. So, for instance, China, over the past year, has reduced its dependence on the US dollar for international trade by twenty percent. So now the US dollar is just over fifty percent of China’s global trade, but it is trending down really fast. At this rate, it’ll be down to zero in two years.
What does that mean? China is the industrial powerhouse of the entire planet at this point. When it stops using the US dollar that is a very major shift.
Q: Yes, it’s true. Mr. Orlov, you made a prediction in your book which [already] came true. You write that it seems that 2020 will be the year when very low oil prices will take down the whole oil fracking industry in the US together also with Canadian companies. Now the oil price was very low – down to zero, almost – and the fracking industry cannot survive. What role does the oil fracking industry play in this scheme?
A: Well, basically the entire fracking industry in the US was more a financial swindle than about energy. The quality of the oil is such that it is mostly useful for making gasoline which is not in short supply. But it’s not very useful for making diesel or aviation fuel, or bunker fuel for ships.
So that, plus the fact that the United States decided to become very hostile with Venezuela, which provided it with heavy oil, has forced it to buy increasing amounts of oil from Russia, even while the fracking boom was running. Now it [the US] is becoming completely import-dependent once again for oil, and this is a process that will run out in a couple of years at most because of the decline rates on fracked wells being what they are: seventy percent per year or so.
So basically the short reprieve from peak oil that the United States gained for itself by spending a lot of retirement funds and other sources of savings that it had was basically a delaying tactic and it didn’t work.
Q: In your book you also mention the…shall I say…political system of anarchy; you write about anarchy, and you also quote the famous anarchy activist Kropotkin. What can you say about this?
A: Well, I’m not a big fan of political anarchists. I’m more in line with what Peter Kropotkin wrote and researched, which is that hierarchically organized systems have their limitations – which is what we observe throughout nature in living systems and in societies composed of animals, which is basically anarchic as opposed to hierarchical forms of organization.
I’ve seen for myself in various start-up companies where I’ve worked, and in various other organizations, that hierarchy is not very efficient at all. It may be good for militaries, but it’s not even that good for industrial production necessarily. A top-down organization is not really the best approach. And so anarchy – as interpreted as lack of hierarchical organization – is actually very useful especially in uncertain, disrupted circumstances where nobody really knows what’s going on. Figuring out what works is an emergent property of the entire interacting population, not the work of one centralized authority.
Q: So Mr. Orolv, last question. Could you give us a short look into the future? You write in your book about life after the nation-state, and you write about the end of the welfare state. So what do you see in the future for mankind. How will the world’s political order look [be ordered]?
A: The easiest way to that is to say that there is no one world already, and there won’t be. There is no humankind: there will be several distinct civilizations.
The world will fall apart into various groups; some of them will remain functioning in terms of industrial capacity, standard of living, etcetera, while others will descend into what was once called third world status, and will fall through. So basically, what you see in the United States, as far as Baltimore or Flint, is the future of more and more of the country. Whereas certain countries, especially those with plentiful natural resources and good, modern, up to date productive capacity, they may have islands of prosperity that will remain. But there will no longer be any talk of [lead the world? Unintelligible phrase at 21:42], or how to manage global affairs or any of that.
Basically, the functioning states will co-operate to the extent that they want to, using bilateral relations, and various international organizations will probably see their budgets cut again and again and again until they don’t really play very much of a role.