Thursday, August 20, 2020

Why Collapse of the US is inevitable while Russia will be spared

Here is my transcript of the interview on the technosphere which I gave to Sputnik Germany.

 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 [answer] 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.