Born in Saint Petersburg, Orlov moved to the U.S. at the age of 12. Visiting his homeland between the late 1980s and mid-1990s, he was an eyewitness to the collapse of the U.S.S.R.
Orlov has written extensively on the stages leading up to collapse, and how different groups of people adapt to 'the new normal'. Orlov argues that the U.S. is heading the same way, and that the U.S.S.R. had it easy compared to what's in store for the Atlantic Empire.
Orlov is the author of two books Reinventing Collapse: The Soviet Example and American Prospects, and The Five Stages of Collapse: Survivors' Toolkit, and regularly publishes essays at his Club Orlov blog.
Running Time: 01:38:00
Here's the transcript:
Niall: Hello all listeners this is SOTT talk radio. I'm Niall Bradley. Your co-hosts this evening, Joe Quinn, Pierre Lescaudron, and Jason Martin.
Joe: Hi there.
Niall: Well this week's special guest; we're hoping he's still going to come on we're still trying to get a hold of him, he's Dmitry Orlov...
Joe: Yeah he's here.
Niall: He's here. Okay good. So we're going to give him a call and get him on the show.
The title this week is "Lessons from Collapse of USSR for USSA". And it's a topic that our author is very familiar with not only because he is born in Russia, grew up largely in the US, but then went back to his homeland around the time when just before Russia was reformed as the Soviet Union and it came to an end and so he zipped through those times.
Pierre: Yeah, before, during and after the collapse.
Joe: That's right.
Niall: And he subsequently went back to the US and started to realize, hold on, I'm seeing the same things happening here and began studying it in great detail. He's clearly very interested in it. One of the first articles on SOTT about this topic we have in 2006 and he was very astute in what he said was going on in terms of comparing it to what had happened in Russia. So, he's not with us yet but we are going to call him shortly.
Pierre: And that's a very useful experience cause such global collapses are something very remote for most of us. Having someone who went through it, who did it and can testify by it, can bring very valuable data. He knows what it is.
Niall: It's actually inspired us to research quite a lot in history and in other countries. Specifically the economics of it but his writing is more than just the sort of facts and figures and the data. Although it is, he does describe it in a very interesting way. You see the same pattern happening, it's A,B,C. Today we hear about, you know, this measure is being introduced and everything will be fine. The actual political sloganeering that's used to introduce this reassurance for people is almost raised the same way.
Jason: So here's my three-point plan... Fix it all!
Pierre: The current soothing declarations made by politicians from mainly of this movie, a French movie where you have this guy who is falling from a skyscraper and every level, every....
Niall: Every floor.
Pierre: Every floor, yea, thank you. Every floor he passes during his fall he's saying to himself, "so far everything is all right, so far everything is all right"
Niall: Yea and it keeps going and it returns to him, doesn't it? He's in free fall.
Pierre: Yeah exactly.
Niall: So, just for the record Dimitri's got three books published and he's got a fourth one coming out soon. First one is "Reinventing Collapse: The Soviet Example and American Prospects". Then there's "The Five Stages of Collapse: A Survivors Toolkit" and "Absolutely Positive", it's collection of essays. There is one that's going to be published soon, it's called "Communities That Abide".
Jason: Like the dude.
Niall: Like the dude. (laughter)
Jason: Like the dude ... abides.
Niall: He's also got a great blog as well, "Club Orlov". He publishes essays weekly.
Jason: Yeah I was reading it earlier. He's got a really approachable writing style I liked it quite a bit. I read several of his articles and he kinda keeps a light hearted tongue-in-cheek tone with it while he's still talking about some pretty serious matters. He had a really good one about the basic scenarios, who like these series of scenarios, like the catastrophic, apocalyptic scenarios or the kind of dystopian world police kind of scenarios as well. And they were all kind of right on and I had this sinking feeling when I read it, that it's not really like pick one, it's probably gonna be like a cluster of a whole bunch of them all at once that are then going to lead directly to a cluster of a another one. I mean...
Niall: Yeah. You get the feeling his audience has been pretty mainstream, to date certainly. And he gets a lot of flak for being a doomsayer because they're coming at him from a position of, "What do you mean? Everything is fine!"
Jason: Well here's the problem with that, that I have, right? I mean history is replete with examples of basically the catastrophic fall of every single major civilization that has ever existed in the last 10,000 years. All of them have completely and totally collapsed into utter and terrible anarchy, right? Why would anyone think that this one is going to be any different? The average lifespan of most, you know, sort of nations or nation states, is at best a couple of hundred years before they - they might reform in name, you know sure Athens reformed plenty of times in name and Rome too but Rome had a series of collapses...
Niall: Yea there were many Romes.
Jason: Yeah. They kept calling themselves Romans but they weren't really, you know?
Pierre: You know maybe the reason why civilizations or the current Western/US civilization doesn't think it will collapse is one of the very reasons why civilizations of empires collapse. Because this illusion of infinite power, of specialness, of we are elected, we will not collapse, we are invincible. And by the way I have a question to the Americans here, so to Jason in particular.
Jason: I'm the only one here.
Pierre: You were saying that Orlov is having problems with a mainstream audience because...
Joe: Hang on second, Hi Dimitri are you there?
Dmitry: Yes I am.
Joe: Hi Dmitry, welcome to the show.
Niall: Welcome Dmitry!
Niall: Well, we've got the show started and we've introduced you. So all that remains now is to say welcome aboard, it's good to have you here.
Pierre: Can you hear us?
Dmitry: Yes, and I hear a delayed version of you as well.
Niall: Okay well, we'll try to say what we gotta say and then give you a couple of seconds to respond.
Dmitry: Still an echo.
Pierre: Shall we try to call again?
Joe: Okay do you want to try and call us Dmitry? I just sent you a link where you can just click on a Skype button to call in.
Dmitry: Ah that's not going to work.
Dmitry: Actually, maybe if I cancel that, it'll get rid of the echo.
Joe: Okay. Try that yeah. Yeah you shouldn't have that page open while you're online.
Dmitry: Yes I closed it. Okay, I think we're fine now.
Joe: Okay, we've got that sorted out.
Pierre: Actually I was asking a question to Jason as [ an ] American that you Dmitry, you've been living in the US for a while so I was talking about this: in the US, the mainstream opinion, to what extent are they aware of the possibility of the collapse? Or is this American dream, all [ inaudible ] and do they think their empire will last forever?
Dmitry: Well, I don't think that it's allowed here to inform people of the possibility of collapse using any of the corporate, mainstream outlets, which are owned by a handful of companies, and they have a company policy which is you're not really allowed to do anything that might cause people to stop shopping, or taking on more debt and things like that. So people like me who try to look at the future and look at the past and see how collapses in other places can teach us something about the collapse that's going to happen here. We don't get a lot of play here. I write a blog and you know, that's still allowed but there are absolutely no mainstream outlets available to me. No mainstream publisher would publish my books. I have on occasion tried to get on radio stations but most of that is for these kind of fringe entertainment shows that are not really for serious people. So there really is no way to inform Americans even if they wanted to be informed but the other thing is that I don't think a lot of Americans want to be informed.
Pierre: You say "I run a blog that is still allowed", does it mean that you envision a collapse that is not only an economic collapse but that will also include some kind of police state?
Dmitry: Well the police state is there. It's just that, well, for instance if I was actually publishing hard data about what the government is doing, the United States government is doing, I would be shut down in a second because I would be labeled a security risk. The fact is that all I publish is opinion and that is still allowed.
Joe: So you're saying that you have information that would be, kind of make it a question of national security type of thing?
Dmitry: No no, perish the thought. I don't know anything.
Joe: Okay, at least that's what you're telling us! [laughter]
Niall: As a result, or indirect benefit is that your writing is very approachable, understandable and you do include a lot of basic facts in there. I've been reading the book, "The Five Stages of Collapse" and you just start from the premise with, look, "Economic collapse is inevitable. It's a matter of time, here's why." Can you expand on that for a second, just in terms of how an economy just cannot grow and grow and grow.
Dmitry: Well, the fact is that the economy has stopped growing. The US economy has been looking like, it's sort of like a corpse that moves. It looks like it's alive because the incredible explosion in the levels of indebtedness, the level of debt. So, this debt is just exploding, it's gone astronomic. And the fact is that the federal government in the United States overspends its tax revenues by a third. Now nobody will tell you that this is sustainable, that this can go on forever. But on the other hand nobody can tell you for how long it can go on. It's this sort of strange levitation act.
All of the money in circulation now is just fake money that's been thought into existence. It's not really supported by anything. So at some point there will be a crisis of confidence, nobody will trust the value of the money, banks will stop trusting each other, you know, banks don't trust their customers but they trust each other even less and trust between banks is necessary in order for any sort of good to be shipped from one country in the world to another country in the world. That's the only thing that glues the world together is letters of credit issued by one bank in one country that's honored by another bank in another country. As soon as that stops working, the flow of goods from one continent to another, including such things as crude oil, will stop abruptly.
That is really the Achilles' heel of this global economy that's very fine-tuned at this point with very thin inventories, just-in-time delivery of everything and these sorts of things cause supply-chain disruptions, which we've already had examples of them, for instance, after the floods in Thailand, it was for a while impossible to manufacture cars pretty much anywhere in the world because of certain missing components that were only sourced in that one country. After the tsunami in Japan a similar thing happened with the, I think, the injection circuitry which was only manufactured in one factory in Japan for the entire world market. So things like that cause knock on effects where something doesn't get delivered and as a result something else doesn't get delivered, etc. And it grows and expands from there. And so that's really the scenario that we are pretty much waiting for, a direct consequence of runaway debt. Right now there's absolutely nothing that can be done to constrain this generation of debt it'll just run its course and at the end of it there won't be such a thing as the US dollar anymore.
Pierre: And what is tricky with US is that it has a very special status, I mean if US was a normal country, or a citizen, it would have been declared bankrupt a long time ago. But here the US economy is so big, prevalent, and the amount of - the quantity of dollar[s] owed by [to] other countries is so huge that if the US go down it will have major repercussions on the other countries. So, how do you envision a collapse of the US? How do the creditors, how do the other countries envision it or would try to manage it, to cope with it?
Dmitry: Well, the dollar will be devalued very dramatically. There will be a bout of hyperinflation and the creditors will be paid in worthless dollars, in notional dollars because the US will simply continue printing money, that's the easiest thing to do. It's just that, you know, it'll be a train wreck. One part of the train wreck will be everybody in the world dumping dollars, which will devalue the dollars and the other part of the train wreck will be the Federal Reserve issuing just countless trillions of dollars; basically fake, unsupported by anything in order to remain, on paper, to remain solvent, to be able to continue floating its debt. But the end result of it is a bout of hyperinflation and lack of access to imports because suddenly nobody will be ready to accept dollars as payment for anything.
Niall: Okay, and we're kind of already seeing this internationally at least. We hear about countries busy buying up gold, is that part and parcel of this?
Dmitry: Well yes. There was, for the past couple of years, there's been this concerted effort on the part of Western US, and Western governments and banks, to suppress the price of gold, to make it artificially low in order to make their currencies look like they're worth more than they actually do. Now, strangely enough, well not strangely but perversely, what this resulted in is a flow of physical gold from West to East, from New York and London to Moscow and Beijing, and a few other places. So that suddenly now you have a block of countries which are poised to start trading with each other using their own currencies. And their own currencies be supported by gold. And the end result of that will be that Europe and the United States will be frozen out of this new economy which is not dollar-based.
Pierre: And there are also those countries, for example China, who are reducing the percentage of reserve they hold, the percentage of dollar and getting other currency and gold, as you mentioned. Do you think they made this shift in order to provoke the collapse of the US or in order to be ready when the collapse happens?
Dmitry: Well, China is not the sort of player that provokes. They have what's called the doctrine of small steps. They continually move in a certain direction at a very controlled rate. So, they buy gold whenever the price of gold dips, for instance. They're negotiating deals with Russia to leave the US dollar out of their trade with Russia. They've negotiated these bilateral trade agreements with many other countries and so every step of the way that they decouple from the American economy, they decouple from the US dollar and they create their own sphere of influence, which the Americans cannot interfere with and that has been their strategy for quite a while now and this is just another part of that strategy, another step in that direction.
Niall: Okay. You've written that - maybe I misunderstood but I have it here in my notes as that "usury is the root of financial collapse." Can it be that simple? Maybe you can expand on that, I mean China for example, if it loans to somebody they'll expect the principal and some in return, right?
Dmitry: Well yes, debt to the power of time is the formula that is used throughout, everywhere, whenever there is lending, there is lending at interest. Except in Muslim countries where it is a crime to do so. So there's lending but you cannot lend at interest. But in most other places in the world that is prevalent right now. Now the problem with that formula is that the growth of debt then outpaces every physical process in the universe. So it can only be sustained in a period of continuous growth, exponential growth, and you can't have that sort of unrestrained growth without a collapse resulting directly from it. So if you exploit a resource, and the rate at which you exploit it grows exponentially to keep up with the debt, then, at some point you will not be able to increase the rate at which that resource is being exploited and the result will be collapse. That debt will no longer be payable; bankruptcy.
You know, there are other analogous things that, for instance can go on in a human body. What happens when you get infected with a bacterium, and the bacterium expands at that sort of rate, exponential expansion? Well, you die. So, debt to the power of time, the formula behind all of finance, collapse [is] pretty much built right into it. It is the direct effect of using that formula.
Pierre: How do you... I guess this is a difficult question, or is difficult to make predictions but how do you envision this collapse of the US Empire, what are the sequences that might happen?
Dmitry: What will tip it over is very difficult to predict. It could be a number of things. It could be an economic shock. It could be a military defeat. That's one of the things that many commentators have thought about because, you know, the United States spends more on "defense" than any other country in the world but what it gets in return for that is a military that cannot win in any conflict. They attack the weakest countries they can find and they still can't prevail and the most that they can actually do is assassinate people. That's still something they are pretty good at. So they have what's called drone warfare, which is basically that you fly these planes, these robot planes and use them to assassinate people. So that kind of assassination and death squads and snipers taking out people, that's something that they're still good at but that's just a way to destroy things. They're also very good at bombing countries. They can carpet bomb a country into oblivion and, Americans have absolutely no moral qualms about doing that. So they actually enjoy watching shock and awe and Baghdad being destroyed on television and things like that.
You know, earlier, Laos, a country that most Americans can't find on a map, was bombed to near oblivion and they didn't care about that either. But all of those tactics are basically tactics to blow things up, not to win the peace. But Americans always fail at winning the peace. All they can do is destroy. So that's not a winning strategy and at some point they'll come up against a real military, Russia or China, or one of the other countries that is not to be trifled with militarily and this military that cannot win against even Somalia will suddenly find itself in over its head and will suffer a defeat which will be a very psychologically, very profound event that may actually tip the country in the direction of outright political collapse from that point on. But that's just one scenario, there are many other possibilities.
Joe: Do you, I assume you would agree that the ruling elite in the US, thinking that they're precipitating a collapse, or that they may be precipitating a collapse, by way of their actions. What do they think they're doing? Are they aware?
Dmitry: Well, some of them are.
Joe: Isn't that a bit kind of self-defeating, or self-destructive?
Dmitry: Well, they're a self-destructive people so if they behave self-destructively that shouldn't be a surprise. A lot of them are very much cocooned and they don't really reason like people. It's almost like a brain parasite has taken over their brain and they behave not like people but like bags of money. So they do whatever it is that their bag of money is telling them to do to make that bag of money bigger.
Joe: That sounds insane.
Dmitry: It is insane. But they're really like, they're really almost automatons at that level. Now among them there are people who have this idea that this is all going to come tumbling down and a lot of them prepare in various ways. Like, if they can afford it they'll buy a private island somewhere, put an airstrip on there, float in containers with years worth of supplies, and build a bunker. You know, it's this sort of bunker mentality, it's very pervasive and quite popular and a lot of people are making those sorts of preparations that will... they buy ranches in Montana even though they live in New York and are ready to evacuate themselves when things stop going their way. So there's quite a bit of that going on.
Niall: Yea. I saw a Forbes article recently, it wasn't taking it seriously, like what you said about the mainstream media in the US. So it was an article about people kitting out or retrofitting their pretty palatial homes basically into bunkers and fortresses with all the latest gadgets for security and long-term food supplies, alternative heating supplies, etc. But that popped into my head when I was reading your book because one of the fundamental things you describe in a transition or post-collapse scenario is the importance of trust among people. People you can trust. Having a network and so on. And I realize those people are screwed because they have all the gadgets but they're missing the number one resource they need: others they can rely on.
Dmitry: Oh yes absolutely. And if you look at it, they can only stay alive as long as they have their bodyguards. But what if they can't pay their bodyguards anymore?
Jason: Or their bodyguards realize that all they have to do is shoot the master and takeover his palatial estate.
Dmitry: Or not even shoot the master, I mean, it doesn't have to be that the brutal. It's just that, you know, it's kind of a turn the tables sort of thing. It's like well you don't... do you want to stay alive? Well then, I will give you orders not the other way around. And I'm sure that plenty of that will happen. So, these people who think that they're ultra-secure, there are certain assumptions that they can't question because if they did they would become incredibly insecure and would have immediate mental issues.
Joe: Is there direct correlation between the amount of billionaires and super wealthy in the US and this possible kind of economic collapse in the USA?
Dmitry: Well, there is a gigantic disconnect. What's going on in the United States is that large parts of the population are pretty much being disenfranchised and are being lost. An entire generation that graduated with a lot of student debt but unable to find any sort of employment, any sort of use of their education is pretty much just being lost, they're dropping out of society or, if they're forming a society it's some other society not this one. And there is a complete disconnect between that and the people who are sort of still on the inside in this shrinking core of the economy that is still doing well. There's some people who are doing extremely well and they congregate in the few prosperous cities. Places like New York and Brooklyn and Boston and San Francisco that are still doing well. But even there it's sort of this constant social atrophy where the number of people doing well become smaller and smaller every year. And more and more people they just can't do it anymore and they can't afford the rent so they disappear. They disappear from the landscape.
I was in San Francisco a little while ago and walked by a pet adoption center and it was full of people giving up their pets because they were being forced to move out of San Francisco because they had lost their job. And you know, it's sort of the sign of the times, that's what people are forced to do.
Joe: So, I mean, I'm just trying to get to the heart of, like in terms of economics, to the core of the reason why there may be, why the American economy is tanking, you know. What's the core reason why that is happening right now? What have the elite been doing over the past 20 or 30 years or longer that is caused the country to be on this kind of knife edge and is there a different way they could have done it and why didn't they do it? Why didn't they invest in a more sustainable... I'm assuming there's a way that they could've created, or managed a sustainable economy but apparently they haven't. So what have they been doing?
Dmitry: Well basically what they've been doing is they've been nurturing various types of parasites. Gigantic parasites. So they've been nurturing this medical industry which is the most expensive in the world but provides similar benefits in terms of life expectancy as Cuba, which spends 5% of what the Americans spend per capita on healthcare. So the medical system is basically a ransom system. It's a scheme for confiscating people's savings when they get sick. That works really well. The military is another giant parasite, biggest in the world. And you know, the strategy, for instance, the strategy of expanding NATO to encroach and surround Russia, not a very good strategy if you're shooting for security because the last thing anybody wants is for Russia to become insecure enough to actually start acting out. So that happens because there's money in it. Every time another country joins NATO the US military can ask for more money. And there's a never ending list of similar things.
The prison population in the US is the largest in the world. The largest percentage of people in jail is in the US. 5% of the world's population, 25% of the prison population the world. Ten times more mentally ill people are in prison than in mental hospitals in the US. So, all of those things that the prison complex is being treated [as] some sort of a profit center and it's true that it does make a profit for the privatized part of the prison. A lot of prisons in the US are for-profit. And they also make money off the prisoners because they use them as slaves. Few people realize there are more black slaves in the United States now than there were in the South before the Civil War. It's just that they're not on plantations anymore, they're in prison. So, all of these things, that's what Americans are doing, is building these gigantic parasites that rob them, that steal their energy.
Joe: Okay, they suck all the wealth and productivity of the American people into, you know, to the top of the pyramid and just sit on it and then they go around the world. Well they use the American taxpayer money to finance the military that goes around the world in the service of these same parasites to try and steal the resources of other countries to kind of prop up their faltering economy or to fill their coffers even further. And I suppose the point there is that the planet is a finite place and as I've seen in Russia and Ukraine, it doesn't always go their way.
Dmitry: Well yes, they destroyed Libya, stole Libya's gold and then they tried to do the same thing with Syria but couldn't. And so then they, well they went a long way towards destroying Ukraine, stole Ukrainian gold. But I don't know what's next. I mean, there isn't... there aren't any more soft targets. It takes a long time to drive a country to a state where Americans can actually just blunder in and do what they do and get the results they want. And I'd say Ukraine after being robbed for 22 years and dismantled and riddled with these oligarchs - it was a sufficiently disrupted place so that they could manipulate it. And it was such a playground for the CIA and other special services for years and years that they could stage-manage a revolution. There aren't that many places in the world left where they can do that.
Joe: Or where they haven't already done it.
Dmitry: Or where they haven't already done it, yeah.
Pierre: Another factor you mentioned in "Reinventing Collapse" is that unlike Russia, the USA today have almost no more production tool[s], everything has been offshore. So if I understand your reasoning correctly, once there is a collapse, the USA, will be unable to get any goods.
Dmitry: Well, yes. Basically it's a nonproductive economy. They went in for services instead of actual production. The number of manufacturing jobs continues to shrink. And part of that was driven by the idea of making bigger profits by off shoring production and part of it was this political desire to destroy trade unions. So it was politically inspired to a large extent. But the end result is that this is a very hollow economy. There's no production going on here, there's just consumption and printing money. What the US produces is dollars.
Niall: You can't help but, feel that the form the collapse will take will be very abrupt. Although it is happening, I suppose, there must be a... not must, who knows I'm predicting here but you can just see a point where it's that one next crisis that complete chaos breaks out. I mean, could it be that bad?
Dmitry: Oh it's that bad sometimes, in various places. So that, for instance, Hurricane Katrina disrupted the delivery of refined petroleum products to the East Coast, suddenly it was all chaos. Suddenly people were just doing battle at gas stations. There was violence and all sorts of horrors but then as the supply gets restored everything goes back to normal. Now, if the supply isn't restored, if there's a disruption of that sort and the supply isn't restored within some finite amount of time then a certain point of no return is reached. The situation spirals out of control so that it can't be restored any longer. It no longer becomes possible. So, I think that they will manage to hold together in some places, like inside the Beltway in Washington, I think New York, all these super-rich places will be able to spend their way out of it somehow, for at least a while. But I foresee that huge chunks of the country will suddenly become sort of no-go zones where nobody will go there, nobody will know what's going on. It'll all just go dark.
Joe: In your book, which is an excellent book I say, "Reinventing Collapse: The Soviet Experience and American Prospects", you said the collapse of the United States seems about as unlikely now as the collapse of the Soviet Union seemed in 1985. So I mean that kind of speaks to what Niall just saying that in the Soviet Union it happened very quickly and unexpectedly.
Dmitry: Well, I... it wasn't entirely unexpected.
Joe: For most people even?
Dmitry: For most people, yes. But I think you could actually see incapacity of the Soviet government to compensate for what [it] was facing which is basically trade imbalance that made it go bankrupt. And you can see the same thing in the United States except here they actually print the money into existence. So, the Soviet Union pretty much ceased to exist when it ran out of money. As soon as it ran out of money. Whereas the United States ran out of money a long time ago but is using this clever trick of robbing the rest of the planet. Now how long can that go on? Nobody really knows. But if three years ago people were talking about the petrodollar and thought that there were problems with it, potentially, theoretically. Now nobody thinks that these problems are potential or theoretical.
There's going to be a gas deal between China and Russia being signed in the next few days. Really, really large deal that cuts out the United States from a large chunk of trade. Russia is setting up systems for trading its oil without using the US dollar, cutting the US Federal Reserve out of that equation. So these things are actually going on. And the sorts of tactics that the Federal Reserve now uses are basically very thinly veiled despair is what it looks like. So, it looked like Russia dumped a $100 billion worth of US treasury notes, I think was a couple of weeks ago, and those notes were bought up by "Belgium". Now, Belgium's entire economy is only three times that amount so where would they suddenly get that much money? Well obviously Belgium was just being used as a front for money that was printed into existence in order to snap up these treasury notes. And who printed them into existence? Well, of course, the Federal Reserve. So as that continues to happen there will be a larger and larger pool of notional money that isn't really useful in any capacity. It's money that is said to exist but if anybody ever tries to use it for anything it'll turn out to be worthless.
Niall: Yea, like a subprime loan or mortgage. That's insane that a whole country's economy is being used to launder bad debt.
Pierre: Yea. It's a death sentence. Belgium being the nexus of NATO in Europe...
Niall: And the EU.
Pierre: ... and the center of EU, Brussels. It's no surprise that Belgium was used as a front to buy this bad debt.
Joe: That's where NATO's headquartered. Maybe they stored the cash in SHAPE; Supreme Headquarters of the Allied Powers in Europe. In outside malls and bedrooms there you know?
Niall: Yea, they put them in the nuclear silos there. [laughter]
Pierre: Now Dmitry, we're talking about the prospective of the collapse in the US and I suppose for most US citizens, for most Westerners a collapse is very remote. We live in a world of overabundance and of goods and services. We don't know, we cannot even imagine what is a day, a day without electricity, without running water, without sewer system, without food but you, on the other hand, you have experienced during your stay in Russia what it is to face scarcity so, can you describe what it is to live daily with[in] a major crisis?
Dmitry: Well, I was there at various times as events ran their course. So, in 1989 I was there and things seemed relatively normal by Soviet standards. And then in the summer of 1990 things were no longer normal because most of the shops were empty or closed and it was very difficult to find anything to eat. And most of the people were out in the country trying to grow some food or hunting or fishing or something because the official economy basically ceased to exist to a large extent. And then a few years later I was there in '93 and that was the really dire time when there was hyperinflation and the value of the ruble was really, really low so that translated into dollars the average salary was less than one dollar per month.
And then a few years later there was still a lot of inflation but there was a thriving private market system and lots of mafia activity that had replaced the government. So the police were sort of non-existent but there were these thugs running around with baseball bats and knives, there weren't even that many guns yet, kind of terrorizing the population but at the same time maintaining some semblance of order and allowing these improvised market-based mechanisms to function to some extent. And then that ran its course and I didn't go back for 13 years. I was there for the entire winter last year, and it's a different country altogether. It's like day and night. So Russia now is on a continuous upswing and it's better than it has ever been. It's richer, it's more powerful, it's more competently run and the changes are just really dramatic. Really impressive that so much progress was made in so little time. Really in just a little over a decade.
Joe: Again, in your book you make some good points, very practical points, cause obviously the topic is about the potential kind of collapse in some form or other perhaps, what will happen most quickly and most unexpectedly in economic collapse, and you talk about what people should do and what they should think about. First of all, they should think about the prospect of a collapse and they should consider each important thing in their lives and be prepared to answer two very important questions: Is it collapse proof? And if it is not, what can I do to make it collapse proof? For you, I mean even in your own preparations, I'm not calling you a prepper by the way but, in your own preparations for this I'm assuming you've taken, or made some preparations. What are the things that you focus on in terms of preparing for such an event?
Dmitry: Well, I don't know that I can present myself as something that people should emulate. To each his own I would say.
Joe: Yea, well, since you studied it though, I mean I suppose yours would be a good example of one possibility.
Dmitry: Well the things that I've experimented with, experimented with successfully is, really downsizing my existence and getting rid of everything that is superfluous. Learning to live comfortably on very little money and giving up quite a few things. Like I gave up a house, I live on a boat now, and if we do get a house it'll probably somewhere in the tropics in Central America and it won't be a very expensive one. And just riding a bicycle instead that works pretty well for me. Living on a sailboat and learning how to do everything that I need on the sailboat by myself. That makes it unnecessary to pay rent. And because I don't have to pay rent I don't really have to keep a job. Most of what people earn in the United States, in a lot of places, Boston especially, where I am goes towards paying rent so I got rid of that and the mobility that I've acquired as a result has really freed up a lot of options. So that if things are comfortable I can be in any place I want, but if things suddenly turn dire then I basically have an escape. A way to get out.
Pierre: How do you produce energy on your sailboat?
Dmitry: It's got a diesel engine, which is useful for getting in and out of harbors, and solar panels and a wind generator are enough to keep the lights and the communications running, which is really all that's needed.
Pierre: Okay. In your book "Reinventing Collapse", and I quote you here, you wrote:
"When faced with a collapsing economy one should stop thinking of wealth in terms of money. Access to actual physical resources and assets, as well as intangibles such as connections and relationships, quickly becomes much more valuable than mere cash."Can you expand on those 2 points, having assets and having a network?
Dmitry: Well, usually the first thing that get disrupted is commerce, money-based commerce. So you swipe your card and nothing happens or the cash that you have is suddenly worthless. Now, if you actually know people who have stockpiles of the things that you need and have some stock piles of your own or have access to resources, then you can trade on those resources. So, a stack of hundred dollar bills is suddenly worthless but if you have lots of copper wire, then you can exchange that copper wire for something else that you need, something that you might eat, for instance. That's the way that people need to start thinking: What do I have access to that does not require money?
Joe: Is that the kind of way it worked and did you notice that happening in Russia? Post-collapse that after hyperinflation and money not really being worth anything that people kind of quite quickly turned to barter?
Dmitry: Yes, and Russian, even state enterprises, used barter very extensively in all sorts of interesting ways and had become so efficient at it that now, there is this Russian way of doing business that is becoming extremely widespread around the world. When Medvedev, or Putin, they fly around the world and they sign trade deals with various countries, a lot of those deals are barter deals. They're not denominated in money.
Joe: That's interesting because that's what Chavez did that quite a lot in South America. North Korea and Venezuela exchanging oil for animals, or crops, or I mean ...
Dmitry: That's right!
Joe: ... it seems such a more rational, logical thing to do, you know?
Dmitry: Well yes, it's a very successful model and it really, it always existed. It's just that it became very prominent during the 90s in Russia where there wasn't ready access to any sort of finance that people could rely on and so they turn to barter instead.
Joe: And you don't see the US government engaging in that kind of a policy post-collapse then?
Dmitry: Well, they might but the problem here is that the financial regulations in the US are such that you can't really use barter.
Dmitry: Everything has to be denominated in dollars.
Joe: Mmm yea. The almighty dollar.
Pierre: Another question about barter. You describe post-collapse Russia as being plagued with thugs and mafia with a quite a high level of insecurity and violence. How do you ensure that when you have, for example, copper wires that you want to trade for food, for example, how are you sure you would not be robbed? You will not be a victim of violence, it wouldn't be stolen? How did it work in Russia?
Dmitry: Well, basically both parties had to pay for some organization that provides them with security. And typically it's some mafia organization, some illegal organization that doesn't actually do anything except for maybe kill people, if they have to. But they can kill people very readily. And so, you have your thugs, and they have their thugs, and so they know they're in on your deal. They know what's going on. If one of the parties decides to not fulfill its obligations under the deal, then the two groups of thugs they have issues with each other, and they get together they sort it out. And as a result of that, usually the person who lost money on the deal gets compensated and the person who caused that money to be lost is punished in some very severe way. So that was how it all functioned. Basically there were these enforcers that specialized in dispensing violence and they defended their honor through violence because that was their tradable commodity, it was their honor, their reputation. And eventually they were legalized, and then they were absorbed, or outcompeted, by the Russian government because the Russian government started providing the same services more cheaply.
Jason: [laughs] Geez!
Pierre: Wow. Why that's some kind of fraud here! I have a question that may be naive but do you have in mind some examples in Russia where, I don't know, big families or neighborhood or some kind of [ inaudible ] communities organized themselves and provided this security? Maybe they had arms or they had a group of men who was [ inaudible ] this security task?
Dmitry: I don't have any examples like that, no. There was basically regular people, just normal regular people living their lives are not highly specialized in dispensing violence. The violent entrepreneurs in Russia, they were basically apart from the general population, and above it. And yes, they did figure out which district belonged, or which street belonged to which person. They fought battles over turf. But these were not battles with the general population. The general population was basically there to feed them, to provide for them.
Niall: Yea, but it sounds brutal, but I mean, it could've been a lot worse. In an article that Dmitry wrote, it's called "Closing the Collapse Gap" the USSR was better prepared for collapse. He put some examples of what was going on in Russia in the 90s side-by-side with the current more or less situation in the US. And it's a great article for me because you don't even need to say what one could expect in the equivalent situation. You can see that it's much worse. For example, Russia came into this crisis with a very well educated population. Everyone effectively ended up owning their own home. There was great public transport. They weren't reliant on their own car and therefore energy to fuel it. And so on and so on, such that "it could have been much worse" was mitigated. So what I'm getting to here in the US, the potential there for a far worse scenario that'll totally floor you is on the cards no?
Dmitry: Well yes, that is my basic thesis. And that's why when people ask me what is there to be done my answer is leave the country.
Jason: Well yeah, I saw that on your blog actually, "Leave the country! That's the answer." But I wanted to get back to the mafia thing because it's kind of this gross naïveté that people have about how things kind of function; that a mafia is a kind of impromptu government basically. Because the government basically gets paid by you ultimately to be violent in a certain sense. Now of course as it gets very big and does lots of violence pretty soon it doesn't have to do so much to maintain itself but they still can. And a mafia basically does the same thing. I mean we have words that we call it, extortion when it's the mafia, we call it taxes when it's a government. But essentially you pay your taxes so that the police will come and pick up anybody who robs you or cheats you or frauds you.
I mean, that's kind of like the average citizen looks at a government in that kind of way. They just want to go about their lives, they don't want to be robbed, they don't want to be murdered and they don't want to be defrauded.
Joe: Well that's why they are called the force of law and order, am I right?
Jason: So I mean, if you have complete collapse, you're going to have some entity that's going to fill that vacuum that is no longer being filled up by the government and that will probably be some form of organized crime with people, as your saying, specialized in violence and people have a disrespect for violence but those people are ... they're efficient at it. It's what they do. And you kind of have to recognize that there's never going to be the situation where a bunch of average people who spend most of their day thinking about common average man tasks are ever going to suddenly pick up a gun or a knife or a sword or something like that, and become proficient fighters in like 5 minutes. The type of people who dedicate themselves to violence, you don't want to mess with.
Dmitry: Well, it's a professional task. Dispensing violence is a professional task, it's not for amateurs. Any professional can outcompete any amateur. So there's no reason for amateurs to even try. And as soon as you enter that path, and you usually enter that path by killing somebody and announcing loudly that you killed that person and if anybody has issue with that you will kill them too. That's how you establish your reputation, set yourself up in business. But once you start on that path you're basically almost a different species from the rest of the people. The rest of the people are there to feed you. What they have is yours by definition. You will take it from them as you see fit. [What] we'll provide for them is, if they fall under your protection, because you protect your turf, then anybody who impinges on that turf, another violent entrepreneur such as yourself, will have to answer to you.
Jason: Basically it makes a monogamous feeding arrangement. I feed off you, no one else can. And so you kind of take the devil you know, as long as they're not too rapacious...
Joe: Sounds like government.
Jason: Well that's exactly what a government is. Ultimately a government does become rapacious but when they start out, they're a parasitic organism, whose specialized in compelling people to follow whatever set of rules have been established.
Dmitry: Well, it's a very standard process that occurs in history when one political system falls apart. What you have then is what's called the process of aristocratic formation. First you start with garden-variety thugs and then eventually they become wealthier and start dressing better, get expensive cars and then get them some palaces, and some private jets. And then they announce that they are kings, as opposed to thugs. And eventually they get a parliament. [ inaudible ] voters.
Niall: To give the illusion of freedom.
Niall: Well, you've not just studied what happened in Russia, I guess you've looked at this phenomenon across time and across countries. You know from that it's a simple fact that most people either cannot or will not leave. They're not in a position to leave. So I mean for Americans looking at ... who can see what's going on and what's coming down the pipe, what can they realistically do?
Dmitry: Nothing, most of them. This is why I really don't want to continue doing what I've been do -- writing on this and trying to branch out into various other things. It's because the number of people that I can reach is rather small. I do have a faithful audience that's growing over time. What I say does resonate with quite a few people. And I get letters from them saying: "Whoa I've read you and you've changed my life and I look at the world differently now", so that's gratifying. But on the other hand I don't think that I can really help that many people. I can help them think in different ways, but what can I do practically? Very, very little.
Niall: Okay. So let's take the weight off your shoulders in terms of predicting what one might do. You've analyzed it and you've described what has happened in other situations where the traditional family/small community unit has organically grown and formed what you call a resilient community. Maybe you could talk about that for a bit.
Dmitry: Well that's a direction that [I've been] researching for about a year and I just put out a very limited-edition book called "Communities That Abide" just in the US. And a few hundred copies that I'll mail out to people. But I'll also publish it as an e-book internationally so that people will be able to download and read it. And it's really about the principles, the common principles of small separatist communities, of which there are many in the world. And all sorts of examples from small farming villages in Laos to religious communities in the US like the various Anabaptist groups, the Amish, the Mennonites, and the Hutterites. Religions or cults, depending on how you look at it, such as the Mormons in the US. Various other groups as well. The Gypsies, the Roma, who are insular but number in the millions. And it turns out that they all have basically a set of principles that they all adhere to. All of them.
Niall: The Jews too, they're pretty resilient.
Dmitry: Well yea, the Orthodox Jews are another example. Their communities are quite strong. But they all adhere to a certain set of principles and actually I was able to boil them down to so-called "13 commandments". They're not really commandments they're more like recommendations. But there are really just 13 principles that are not optional that all of these communities use.
Dmitry: Such as communalization of money, such as nonviolence and refusal to serve in the military. Such as making sure that they suffer some amount of persecution by setting themselves consciously apart from the surrounding community because lack of persecution means they have less of a reason to exist. Like avoiding becoming wealthy. They have to stay somewhat poor but have ways of burning off their wealth. So, the Roma for instance, they look like poor beggars but if you ever see what happens when they throw a wedding well it's a feast, last 3 days. Because that's how they burn off their wealth.
Niall: Yea, and there are a lot of examples from older times as well where, if there was an excess crop I think, they would sacrifice it to the gods cause it was sort of bad luck or they knew that it would cause trouble.
Dmitry: That's another one. Another is that they refuse to be proletarianized. They refuse to participate in wage labor. They don't use money within the community itself, generally. They pool resources. They interact with the outside world as a group not as individuals. Also, basic principles that are ... basically what I ended up with is basically a kit. If you want to start a resilient community, here's how you do it.
Niall: Yea, the fundamental premise seems to be, you start small. And you...
Dmitry: And you stay small.
Niall: Yea. Exactly. Your description of what happened to Iceland is super because you got these quotes from their president, I think he's still their president, that I've never read before and obviously they didn't want people to hear too much about it too widely. The main thing seems to be that Iceland got through having the economic financial gun to its head by being small.
Dmitry: Well, yes because they basically could resort to direct democracy. Basically the amount of individual sovereignty of an individual within society is inversely proportional to the size of the society so an Indian voter in India is a midget compared to an Icelander who is a giant.
Pierre: Can you explain why such communities are better prepared to face collapse?
Dmitry: Well the smaller the community the more people know each other face to face and trust each other, rather than trusting impersonal institutions. When collapse occurs basically that invalidates a lot of promises and assumptions. So what people used to believe they no longer do. But they can still trust each other on a personal level. However, if all of their interactions with each other are mediated by various official institutions and commerce, the institution of money is a fundamental institution. If that's all they have then they have nothing. They really just have their friends and their family. If they can't make use of those connections, the personal connections that they have, then they literally have nothing.
Pierre: And if there is [not] this trust within the community as you pose, you cannot materialize all the potential complementarity help where people put together the skills, their resources, their energy, is that the idea?
Dmitry: Well, yes. The idea is to not depend on the outside world for anything that you need to survive. So, all of the basics: food, shelter, basic medical care, companionship, education, care of the young, few other items like that. All of those have to be handled within the community itself based on personal trust, personal relationships. And that makes it resilient. Then basically the country can fall apart, you can take the whole community, relocate to a different part of the world. You can change anything, but the community will stay intact.
Pierre: Are there examples of communities that are totally [ inaudible ], I mean, totally autonomous producing hundred percent of their energy, food, water?
Dmitry: Well they don't actually have to do that. They can have broader relationships with other communities. So they don't have to be absolute islands of that sort. The whole problem is that they do not deal with the outside world as individuals. They deal with the outside world as tiny nations.
Joe: What's the optimal size of such a community in your opinion?
Dmitry: A 150 people is the maximum. Well, the way these communities function is through direct democracy and all of the really important decisions have to be reached by consensus. So, you can imagine how difficult it becomes to reach decisions by consensus. So basically, talk things through until everyone agrees, with 150 people. Beyond that it just basically takes too much time. So, for instance, the Hutterites, when they reach that number, 150, they split in half. They draw lots to figure out which families stay and which families go. And they buy land, and they set up this new community with 75 members on this new plot of land. And they maintain links but only for as long as necessary and after certain amount of time if the new colony doesn't fail, if it provides for itself then it's set free.
Joe: So, just relating that to the US, the demographics in the US, that would kind of suggest that people in small communities, in rural communities in the US might be in a better position than people in big cities who don't have plots of land. [They] don't have a real sense of a community there and I'm just imagining a scenario where people having the worst time post-collapse would be people who are entirely dependent on the local government or the state or whatever in big cities rather than people in local communities can tend to know each other and...
Dmitry: Yea you'd think that way but if you look at a lot of communities in the United States, the people living there drive long distances to work in factories or in other establishments. They pay taxes on the land they own to local state and federal government. Which means that they have to make money, they have to participate in the outside economy. If they want to build a town to have the population density that is required to have any sort of a reasonable community then they end up having to pay for a police department or a fire department and all of this other mandated stuff. Mandated by the government but not paid for by the government, it's paid for by local taxes. So suddenly that becomes an even more expensive proposition. And so that's not a way to do it. Small towns in the United States are definitely not the way to build communities of that sort. I've talked this through with some people who have a lot of experience. One of them had a great deal to do with this place called "The Farm" in Tennessee which at one point, back in the 60s, was the single largest hippie commune in the world. Over a 1000 people. Another one is currently running a place called an interfaith sanctuary [Four Quarters InterFaith Sanctuary]. And I'll actually be going there next week to a conference.
And we talked it through and we decided that the best way to deal with the American environment and sort of set the terms of setting up a community like that is to basically make it into a religious organization. It doesn't matter if it's a real religion or a fake one it could be pastafarianism or something. But that gives you the tax exempt status and then make it into a nature preserve as well because then you can be deeded so that there can be no real development happening there. And it's better if its minority owned because then if people come after you there'll be lots of organizations defending your rights. And historical preservation because then you can establish your own building standard that cannot be violated so no matter what anyone does nobody can come in there put up some kind of ugly utilitarian structure. So, those are the four ingredients, that's how you fight it off.
So, American politicians are very scared of religious groups because the election cycle is pretty short but the grudges that religious groups develop last forever, last for many generations. So they know to be very careful around cults and religious groups. And they don't really try to dominate them at all because there's such poor precedence for trying to do that.
Niall: Except for Waco.
Niall: I think they tried to set an example there and that backfired. Because...
Dmitry: Well yes. That's a rather extreme example but that's the exception that proves the rule.
Pierre: And along Joe's question, my thought was that it was better to be in a rural environment during a collapse than in the city because in the city you have such a scarcity of resources; there's no land, you cannot grow food, you cannot fish, you cannot hunt and there's a lot of people who are starving. And starving people are not always the most recommendable [rational] individuals. So, am I mistaken here?
Dmitry: Oh not at all. I mean, first of all, even in a relatively stable situation, starting a commune in the city is very, very difficult. Because you really do need to have the ability to focus on your membership to the exclusion of the outside world and in the city there's just too many distractions. And it's too difficult to come up with a compact living arrangement. The Orthodox Jews do manage to do that but it takes a lot of resources. Because they can't drive on Sabbath but they have to go to school on Sabbath. They have to be able to get there on foot with their children. So they buy up houses around where they have school. And on Sabbath, where I lived in a neighborhood like that, the streets were full of Hasidic Jews with their kids walking to school. And that's how they take over neighborhoods, that's what drives them to live compactly in cities. But they're kind of a special case that they're able to do that. They sacrifice a lot for it. They're not wealthy as communities, they're wealthy individuals but as communities they're not wealthy. But in general if a community wants to provide for itself it needs land. It's good to have connections in the city. That's where people come from, that's where you recruit. There's nobody to recruit out there in the wilderness. But community itself should definitely have a locus somewhere where there is land.
Pierre: You say that the best advice, the first advice was to leave the USA. Do you think at one point authorities will lock the borders and it will be impossible for US citizens to escape?
Dmitry: Well, they're already trying to do that to some extent. So, American citizens pay taxes in the US no matter where in the world they live. And even if they never lived in the US. So, children born to US citizens abroad are supposed to pay taxes for their entire life. And if you want to opt out of having an American citizenship, that's a possibility and more and more people are doing that every year. It's now a few thousand people a year but it's going up, it's doubling because a lot of people find this onerous. Also, American citizens have to report on all of their bank accounts in any part of the world. If they don't the fees are huge; the fines. And so a lot of the wire transfers are scrutinized so it's becoming difficult to get money in and out. All of those transfers go through the Federal Reserve and are recorded. So it's this sort of financial panopticon that Americans live in now that they just cannot really easily avoid. It'll probably come to a point where Americans who are behind on their debts will not be allowed to leave the country. I can definitely see where that will happen. There's certainly a lot of people who get into some kind of trouble with the government and their passport is revoked and they can't leave. And at some point it may turn out that Americans will require an exit visa to leave the country and the authorities will question the reason and scrutinize the person's past to find out whether a certain person should be given permission to leave. Certain people who owe a lot of money might be labeled a flight risk based on the fact that they owe a lot of money.
Joe: A flight risk to the federal government, to the Federal Reserve, yeah.
Joe: I just want to change topics little bit 'cause we're getting... we're kind of running on in time here. I just wanted to ask you a little bit about Ukraine. Things have been developing there quite quickly and stuff. I mean, and you've spoken about it and written about it online already, but has anything changed in your general prognosis of where that's going?
Dmitry: Well, no, everything is still going in the same direction which is: the United States, the EU is still trying to blame what's going on in Ukraine on Moscow. They're still making allegations that there are Russian special forces in eastern Ukraine fermenting revolt but have not been able to provide any evidence. On the other hand there is plenty of evidence that there are American mercenaries in Ukraine. And there's plenty of evidence that the West is supporting neo-Nazi groups that are guilty of committing atrocities such as torching a building full of people and killing those who try to flee, in Odessa. And the rhetoric is really unhelpful so that the people in the East who will not put up with this government that the Americans managed to install in Kiev, this banker and his junta. You know that they're labeled as pro-Russian separatists, okay? So, how can you be pro-Russian if you are Russian?
Niall: It's a given.
Dmitry: It's a given, right. And then nobody actually manages to get through the idea that these parts of Ukraine that are in open rebellion are part of a nonexistent country. They were basically assigned to this entity called Ukraine by Lenin and for a specific reason. He wanted a Ukraine that was governable so he stuck in a whole bunch of Russian population in with the Ukrainians. To basically not have to deal with the local languages or any of that and lumped them all altogether. And then of course Crimea was lumped in for an even stupider reason which is, Nikita Khrushchev gave it as a gift to his birthplace. And that's full of Russians, there aren't any Ukrainians there. So all of these things are just basically like not even mentioned and what's being talked about is basically some ritualistic incantations, "Pro-Russian separatists". And then when atrocities happen, like what happened in Odessa, thousands of people killed, that doesn't really get on the news at all.
Joe: No, there's no explanation. Yea, I take exception to that pro-Russian thing. Sure, the people are pro-Russian but I think first and foremost, they're anti coup-installed, fascist kind of government in their country. I mean, any normal person that would be their major beef, you know what I mean? I mean, your kind of political allegiance, well, or your ethnic allegiances comes second to that, you know?
Dmitry: Yes, but you have to understand, I've watched a lot of live coverage on the web of events in Donetsk and Lugansk and Odessa. And these people are not strangers to me. They're Russians.
Dmitry: They're just like the people across the border in Russia, except that they were stuck on the wrong side of the border for 22 years. So they're like Russians from the 1990s. And it's like a bunch of Russians stuck in a time warp. That's what I thought I was seeing, that's how it struck me. They got stuck in a time machine that doesn't work.
Joe: Yea. Do you think that the Russians, Putin and his advisers etc., that they saw this coming and that they had certain plans in place to deal with it before, maybe long before it happened?
Dmitry: No. Basically they were trying to be helpful, believe it or not. So the EU wanted to absorb Ukraine but that really meant bankrupting Ukraine and then selling off everything including the dirt. Basically these IMF arrangements are just ways of robbing countries. And the idea was to open up Ukraine as a dumping ground for Western exports with the understanding that Ukraine does not manufacture anything that Europeans want, that all of their industry is Russia oriented, Russia being the biggest trade partner. Okay so, Yanukovych is not the smartest guy in the world, okay? Actually I think he is borderline idiotic. He's just incredibly greedy. But, he was smart enough to realize that that's just not going to work. So he turned around to Moscow and said well can you give me a better deal? Moscow said: "Sure we'll give you a better deal, here's $15 billion, here's a free trade deal as part of the trade union", free trade zone within CIS. And then, the Americans turned around and decided to cause a revolution and to overthrow him, which is what they did. And they installed the people that they wanted to install that they named by name. So, that was certainly a bad turn.
Now, Putin has played it skillfully and did nothing illegal in order to annex Crimea which was a big victory. If you look at Russia's standing in the world, how Russia's perceived around the world; the victory of the Olympics, all those gold medals that the Russians won followed by the victory in Crimea where they were able to get their territory back without firing a single shot and without breaking a single law. All of those things have really improved Russia's standing in the world. So if you look at how many people are interested in learning Russian now? It's amazing. It really went up. And so Putin is definitely the winner there but when it comes to eastern Ukraine I would say the best outcome is Ukraine becomes sort of Russia's protectorate. But in return, and [it] won't explode as a result of that, will not turn into Yugoslavia. They have 44 million people and nuclear power plants. But in return, the US has to pay, and the EU. They broke it, they pay to have it fixed. Russia will not pay for the reconstruction of Ukraine which the West wrecked.
Niall: Yea. Now realistically Washington will not accept those terms. So how do you see things playing out at this point?
Dmitry: I think the fight is between Washington and Brussels. I don't think Russia has much to do with it.
Niall: Yea, there seems to be... they can afford to sort of sit back and let things unfold, take their course.
Joe: Yea, there is a bit of realpolitik coming in in terms of the EU and people in the EU have to make some hard decisions here in first and foremost they have to look at the geography. The fact that they're on the same land mass right beside Russia and the US is way over there. I mean, it's a struggle definitely, between ideologies and all of the ties that the Americans have made with the EU and the EU has made with the US. But, when it comes down to it, you know, I mean, this is your AJ and America's a different continent, you know?
Dmitry: Yes, well the funny thing is the United States perceives itself as the indispensable nation. And it turns out that it's actually the only major dispensable nation that there is.
Joe: Mm-umm. Yea that's a real comedown from the past 30 or 40 or 50 years. When America ruled the world, you know?
Dmitry: Yea, but I think that there will be certain inflection points that will come. For instance, there will be this point of realization where NATO countries will realize that NATO is not going to start World War III, nuclear Armageddon, over Estonia.
Dmitry: That Estonia is not worth destroying the planet over. At that point you don't have NATO anymore. And then at some point they will realize that Washington is perfectly happy to have all of Europe shiver in the dark next winter by actually wrecking things so that Russia can no longer export gas. And they'll realize that it's in their interest to switch allegiances.
Joe: Yea America will do that just so it can save face, essentially. And maintain the idea of America as this...
Niall: Benevolent hegemon.
Dmitry: Well, in its hour of desperation the United States is capable of doing massive damage. And it's really up to Western Europe to realize which country is behaving in a legal and peaceful fashion and which isn't.
Pierre: It's simple.
Niall: Dmitry, what ideology, if any, exists in Russia today? So communism collapses, what's holding the country together, I mean... communism...
Well, Putin calls it sovereign democracy. It's a democratic system where people directly elect a popular leader. And say what you will but it works, if you look at the popularity, Putin's popularity. It's the inverse of Obama's popularity. So, Obama's popularity is, what, 20% something like that? Putin's is closer to 80. He's incredibly popular. People directly vote for the president and it's their president and the president is answerable to them directly. So that part of it works, and the other part of it is it's a sovereign democracy, which means that it's not amenable to foreign manipulation.
Dmitry: And so USAID is not allowed to ferment revolt as it has in various other countries, including Venezuela. And various other organizations are not really allowed to operate on the same scale as they can in other countries. There were events like the whole White Ribbon thing that happened after the last elections. And they airdropped these little white ribbons that were supposed to be symbols of freedom and democracy not realizing that they were actually symbols of Nazi occupation. The Nazi collaborators wore white ribbons during World War II. They kind of forgot that. But it's funny, no Russian would ever do that, so you know who thought out that PR campaign. Had nothing to do with Russia. Russians have [a] long memory for that sort of thing. But that all shriveled up. And there's this tiny number of Western oriented people in Moscow that want to make trouble for whatever reasons but they don't actually amount to anything anymore.
Niall: Big question for me is, is Russia impermeable to the kinds of things that international finance can do.
Dmitry: Well, if you have oil, natural gas, uranium, palladium, most of the other resources that the world depends on, then doing nasty financial things to Russia will just basically wreck your own economy. You already see that with the sanctions that the US tried to impose on Russia. So, yea, they imposed some sanctions and now the Russians won't sell them rocket engines. Which means that the Pentagon can no longer launch their military satellites.
Joe: Of course, the Americans are saying that this is good thing for America because it's giving the Americans the kick in the butt that they need to become independent and that it's basically [ inaudible ] to reestablish a new space shuttle program. But obviously in a precarious financial situation that's just gonna speed up the demise if they throw billions and billions of dollars up in space program that they don't actually need if they could just get over themselves and cooperate with the Russians.
Dmitry: Well, exactly. I mean, the reason they started the whole thing is to save money.
Joe: Yea. It's just insane. I think they've just gone insane or been insane for a long time.
Dmitry: Well, I think it's becoming more apparent now. I think it's really, this sort of ranting and raving is really becoming apparent now. There's just basically a psychotic break, a break with reality that has happened.
Joe: No, it's not gonna...
Niall: Which is what Merkel accused Putin of.
Dmitry: Well, actually she was quoted out of context. I don't think that she meant to say that his mind snapped or anything like that. And she's been backpedaling furiously.
Joe: Exactly. I noticed that, yea. Okay. Dmitry we're gonna kind of wrap it up here and it's been really good to have you on. You're a fount of wisdom and knowledge and a very unique perspective because as is in your book, the reason that you are able to make these kind of predictions or see these kind of things coming is because you have these two perspectives that few people have of seeing it happen in Russia and being able to project that onto the US. So, I think despite what you might think [of] yourself you still have a lot of good that you can do and a lot of information you can share with everybody about everything, you know?
Dmitry: Well, thank you, thank you.
Niall: Yea! Keep the faith!
Dmitry: All right, I will try. It's been a pleasure.
Dmitry: Thank you very much.
Niall: Thank you. Bye bye.
Pierre: It was a great pleasure. Thank you.