Dimitry Orlov: You can’t always get what you pay for

This paraphrasing of Mick Jagger's line seems apt for modern times because that is the essential game being played by multiple players in the world today. Seeing this game for what it is turns out to be more difficult than it should be for emotional reasons: people are made angry by the very idea that their hard-earned money can't get them their heart's every desire, having been convinced that money is more real than anything else. But this is exactly backward; all that is real is matter and energy, and money is neither—it is a mere promise. We could spend all day discussing the entire submerged part of the iceberg of official, objective violence that props up this promise, but we won't and simply state that the fiction of money as wealth and the fiction of the free market are both erected and maintained in the interests of the State, or the Government, such as taxation, social spending, military spending and colonial administration.

But it is all based on a promise: "If you have the money, you will get what you pay for." Break that promise, and the entire ephemeral structure simply vanishes.

At this point you may be apt to think that, since money simply vanishes, you ought to do something with it in preparation for that event—eat, drink and be merry, perhaps? Sure, that's a great idea, but what about the rest of it? Do you buy gold futures or bitcoins or yuan, or park it on a small island in the North Atlantic? Do you buy a book called "Russian Made Simple" (https://www.amazon.com/dp/049100530X) or would "Chinese Made Simple" (sorry, title not found) make a better choice? It's rather difficult to directly hoard matter and energy, you know. You might think of investing in matter (a pile bricks) or energy (a gas well) but an investment is still essentially just a promise. You could, of course, just hoard a bunch of expensive stuff and stand guard over it holding a shotgun, but then what happens to it when you have to take a bathroom break?

I feel like I've said it all before. Money is a government scheme. A free market is a criminal market. A day will come when offering someone a million dollars will get you punched in the face. Prepare for life without money. And in response I was asked something like "So, what do you think about bitcoin?" or "Don't you think the ruble is a bit overvalued right now?" Still, I persist...

And so, let's look at one aspect of money that everybody should be very clear about because that's where the whole thing is crumbling: money as a tool of colonial administration. The purpose of colonial administration is to pump wealth out of colonies, and here the most efficient method is finance. Direct violence is expensive and it is much more efficient to bribe local elites to accept an unfair economic arrangement and to keep them in line using the mere threat of violence. This has been the arrangement for some time but now it is failing.

Suppose you have two countries that trade with each other: the Losers and the Loafers. The Losers ship all sorts of products to the Loafers who consume it. The Loafers also ship some product to the Losers—glass beads, liquor, iPhones, access to PornHub, etc.,—but significantly less in terms of market value. This is called a "structural trade deficit": the Loafers are getting something for nothing. You'd expect the Loafers to run out of money before too long, or to be forced to sell off their possessions to the Losers, but this doesn't happen if A. the Loafers have a big army and B. the Loafers print the money that's being used in trade. Then they Loafers can make the trade deficit magically disappear.

The magic is not exactly magical; actually, it's closer to fraud. The Loafers absorb the extra money generated by the trade deficit by offering to sell a certain financial instrument: a government bond, on which they pay some interest. The Loafers then make this financial instrument more attractive by imposing a higher rate of inflation on foreign currencies relative to their own. There are many ways to do this, perhaps the simplest one is to restrict access to the Loafers' currency that's used in international trade. But since all currencies are subject to inflation, over time inflation eats away at this hoard of notional wealth, leaving us with the basic result: the Loafers get something for nothing. And if the Losers start refusing to be robbed in this manner, the Loafers destroy them militarily.

This can (and did) go on for decades, but eventually the Loafers get too greedy, too corrupt and (as often happens with parasites) too stupid. They issue too many bonds, their own inflation rate goes out of control, their military grows weak and their armaments become obsolete. In the meantime, some of the Losers build up a powerful military and a large internal economy. And then they get ready to make their move, waiting for the Loafers to make a big mistake. The move can be anything from the forthright "Pay us in our own money or freeze and starve!" to the sneaky "So sorry, problem at container port, must wait for product!"

Now leaving the land of allegory and entering real time, the fabled lands we were discussing are the US (and its EU adjuncts), Russia and China. At some point it was decided that it would no longer do to actually pay Russia for its various very important exports and that it would be preferable to destroy Russia politically, de-nationalize its resources and put Western companies in control of them. To this end, the West weaponized the Ukraine, turning it into a Nazi dictatorship (all opposition parties banned; opposition leader kidnapped and beaten) with total media control (all non-government media outlets banned, independent journalists assassinated), pumped full of NATO weapons and advisors, and ordered to invade the Donbass and Russia beyond it.

The Russian response has been a sort of military ballet. Somewhat unsurprisingly, few people have been able to appreciate its grace and beauty; but then not too many people understand ballet either. First, the Russians launched their offensive, which they called "Special Operation," days, perhaps hours, before the Ukrainians planned to launch theirs. This completely scrambled the Ukrainians military's cards and made all of their plans useless: there they were all ready to roll east and then all of a sudden here they are pinned down under relentless artillery bombardment. The Russians then tied down the parts of the Ukrainian military that weren't concentrated in the Donbass—one near Kiev, one near Odessa—by threatening them with invasion without actually engaging them. And meanwhile they set about methodically demolishing every last bit of the Ukraine's military capacity—a process that by now has largely run its course. The Ukrainian government has been reduced to staging provocations—essentially, killing their own people and then trying (unsuccessfully) to pin the blame on the Russians, and attempting to take credit for Russia's accidents (such as the munitions explosions aboard the Moskva). Meanwhile, a river of Ukrainians streamed west, now numbering in the millions, leaving fewer mouths for the Russians to feed.

The West's response was to ship weapons to the Ukraine, to replace some of the ones the Russians are swiftly destroying. The Russians have been either destroying these before they reach the battlefield or claiming them as trophies from the Ukrainian troops, many of whom are eager to surrender quickly on good terms. The Russians, for whom safety is Job One, are in no rush at all to finish the mission, which has three goals: securing the Donbass, demilitarization and denazification. Of these, the first is the only one that is really time-sensitive, since retreating Nazi battalions are shelling residential districts, trying to inflict as much damage as they can on their way out, and it may actually be accomplished by Victory Day 2022, which is on May 9th.

Meanwhile, demilitarization is proceeding according to plan, with most of the Ukrainian tanks, aircraft, artillery systems and army trucks destroyed or stranded because of a lack of fuel. Denazification, on the other hand, will take at least a generation, as Ukrainian schoolbooks, which are full of stark raving nonsense, are replaced with proper Russian ones. Older generations will require deprogramming as well, while those complicit in the numerous war crimes and human rights violations Nazi regime will need to be tried, given life sentences and never paroled or rehabilitated (that was a mistake that the Soviets had made with Ukrainian World War II-vintage Nazis).

By the end of April 2022 it seems safe to declare the US effort to weaponize the Ukraine, brainwash its population into accepting Nazism and sick it on Russia is an abject failure. Russia and the Ukraine are major grain and fertilizer exporters and disruptions caused by the military conflict are likely to cause hunger in much of the world as soon as next year, followed by the usual wave of political crises. Russia is also an indispensable energy, metals and strategic materials provider to global industry (hardly any microprocessor chip can be made without a Russian-made sapphire underlay) and its decision to shift payment of all exports to its own rubles (starting with natural gas), which it was forced to make in response to having its dollar and euro accounts frozen (something it considers to be the West defaulting on its obligations) has wreaked havoc with global energy markets.

In spite of being a major energy producer and a minor energy exporter, the US is not going to come out unscathed by all of this. Due to its inane laws (the Jones act in particular) the US is forced to be both an exporter and an importer of liquefied natural gas (depending on region) and due to its inability to comprehend the strategic nature of the energy industry much of its liquefied gas infrastructure is owned by other countries. Thus, the US is also affected by mayhem in the natural gas market, driving dollar inflation higher.

Oil is also a problem for the US: it produces a great deal of oil from fracking, but it's light oil and useless for making jet fuel or diesel unless it is mixed with heavier Russian crude oil, which Russia won't be selling for dollars any longer. As these conditions continue to raise inflation for the US dollar, the US finds itself checkmated: it cannot aggressively raise interest rates to fight inflation because the interest payments on its huge debt would empty the treasury and it cannot keep the rates low because this would trigger hyperinflation and economic collapse. The only thing that could save the US is instant access to plentiful, free energy, made available by a swift Russian unconditional surrender. Therefore, not being very clever, the US leadership has launched itself on a collision course with Russia, but, not being suicidal, has decided to steer clear of an actual war with it.

As I mentioned, one of the key elements of running a colonial administration is maintaining overwhelming military superiority, without which some Loser nation might be tempted step out of line, and if it isn't punished harshly and immediately, others might follow its example, and next thing you know all of them run off and form their own club while all the Loafers are freezing and starving because, having been parasites for so long, they have forgotten how to take care of their own needs.

And here is the problem: the US (and all of NATO with it) no longer has any military superiority over Russia and possibly over China as well. Of the nuclear deterrent triad, all that the US has left that's still serviceable are the submarine-launched Trident missiles, but the Russians know how to shoot them down. Meanwhile, Russia has developed hypersonic missiles which the US cannot hope to be able to intercept, has recently tested a new Sarmat intercontinental missile that can fly arbitrary sub-ballistic courses to arbitrary spots on the planet and can carry hypersonic reentry vehicles, and put into production S-500 air defense system which can shoot down objects that are in orbit and can intercept hypersonic missiles (which only Russia really has, although North Korea is also a contender).

With any sort of nuclear confrontation off the table, all that remains is conventional warfare and economic warfare. The US stands no chance at all in a land battle against Russia on its own turf, with or without the rest of NATO, because of a rather simple problem with logistics: Russia can resupply itself by land while the US has to use air and sea lanes that can be shut down by Russian attacks. The endgame is predictable: the US/NATO run out of ammunition and either surrender or retreat. Thus, all that's left is the US/NATO attempting to pose a minor nuisance to the Russians by sending in weapons. They have sent in all sorts of old junk they had lying around, but to no significant effect. Russian military aircraft can easily deal with the old Stinger anti-air missiles, of the Soviet Afghan war vintage, by firing off heat traps, and Javelin anti-tank missiles have purely cosmetic effects on Russian tanks, which don't even slow down when hit by them. Meanwhile, US/NATO plans to deliver artillery and armor to the Ukrainian side have been neutralized by a few Russian rocket attacks on some well-chosen railroad junctions. In spite of a feverish pace of diplomatic activity, the actual military activity tells a different story: the battle of minor annoyances is being lost too.

A time has come when the Loafers can no longer continue to be Loafers because A. their big army is no longer enough of a threat to keep the Losers in fear and B. the Loafers can no longer print the money that's being used in trade. And then the Losers make their move, which can be anything the forthright "Pay us in our own money or freeze and starve!" to the sneaky "So sorry, problem at container port, must wait for product!" Russia has chosen the former; China the latter.

Have you noticed the Covid lockdown in Shanghai? The reason for it is the Omicron strain of the Coronavirus, which is, by all indications, a tame, domesticated strain that makes people sneeze periodically (as does my cat) and cannot be stopped. It has caused a few dozen fatalities in China among those who were already deathly ill. And yet the government of China has imposed harsh conditions on Shanghai, with people practically imprisoned in their homes or at their work, subjected to daily PCR tests and many other inanities and indignities as well. What gives?

It's worth remembering that Shanghai is China's most international city, home to its largest port and its gateway to the rest of the world. It was, until very recently, full of expats, many of them involved in managing foreign trade. And here is the Chinese government shutting it down for a seemingly spurious reason. Might we inquire as to the real reason for this strange behavior? My guess that this is part of an effort to curtail certain aspects of China's foreign trade while maintaining plausible deniability of doing so. Why ship product to the US when there is rampant inflation there? Why not wait for the price to go up some more? China already has too many US dollars; why would it want any more?

What happens when Loafers can no longer loaf? Once the tide turns, the Losers all band together and become the Looters, and the hoard of actual physical, material wealth that the Loafers have managed to accumulate is crated up and hauled away in exchange for something to eat and a way to keep warm. I've described this phenomenon in detail in my books, under the rubric "asset stripping." And what if such asset stripping violates sanctions? Well, then it will proceed through theft and smuggling; that's all! I'll save a detailed description of how that might proceed for a future article. But that will have to wait until I explain the roots of the current bout of rabid Russophobia that's gripping the West.