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Dmitry Orlov
Dmitry Orlov
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The Divided States of America

A handy historical rule of thumb: when debt service costs of a mighty empire exceed its defense spending, the mighty empire is at an end. So far, this rule has held for the Ottoman, Russian and British empires; the US empire is testing it now. The Congressional Budget Office found that the federal government has spent more on paying interest on the national debt than on the military in fiscal year 2024. US defense spending is roughly $1 trillion a year — and debt service payment will be even higher.
According to the CBO, the US federal debt is going to jump yet again, by close to $2 trillion and exceed the truly gargantuan figure of $36 trillion. A steady stream of billions being sent to support failing imperial projects in the former Ukraine, in temporarily Israeli-occupied Palestine and in the Chinese province of Taiwan are helping with this endless debt bloat.
Meanwhile, as the world gradually but steadily turns away from the US dollar, the process of exporting inflation has stopped, meaning that dollar inflation will remain stubbornly above 3%, in turn forcing the US to continue borrowing at higher and higher interest rates. The tipping point for national bankruptcy and into failed state mode is approaching rapidly.
An inflection point will be reached when Asian countries, including China, which hold huge quantities of US debt in the form of US Treasuries, react to a worsening political relationship with the US by dumping these US Treasuries on the open market. Who will precipitate this disaster in the making? Why, the US government itself! Sanctions and tariffs are America's favorite tools, and it simply doesn't know how to stop. The negative feedback loop, which should exist between the US imposing sanctions and tariffs and the sanctioned countries selling off its US debt holdings, simply doesn't exist. Instead, at every turn, the US government responds by digging its own financial grave faster and faster.
Russia was the first to opt out of this game by zeroing out its holdings of US Treasuries. Now, while Russia quietly plots to deliver a coup de grace to the US in some non-financial, kinetic yet plausibly deniable fashion, it is China's turn: over the past few years, it has reduced its holdings of US debt by a third and shows no signs of slowing down. In addition, the work on isolating the global economy from the US dollar is ongoing, since its toxic nature has become obvious to almost all participants in world trade. The latest example is Việt Nam, which, as a follow-up to Putin's recent visit, is switching its trade to national currencies. As an additional follow-up to Putin's visit, Vietnamese Foreign Minister Bui Thanh Son met with US Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kretinbrink and told him Hanoi views Washington as a strategic partner. In other news, Americans still love the smell of napalm in the morning and words are still cheap.
The willingness of the rest of the world to absorb excess US debt issuance is what has allowed the US to cope with its excessive level of debt. But now the terminal disease of the US dollar is for everyone to behold: everyone is starting to avoid it as if it were a leper. In turn, the death of the US dollar will mean the death of the United States, turning it into the Divided States. Being able to issue checks that don't bounce is a key function of the US federal government. Once this function becomes impaired — either through hyperinflation or through other, more direct sorts of insolvency, the individual states will inevitably drift apart.
What will happen to each individual state depends on the structure of its economy. Behold the following per capita balance of payments map (for 2019, but these are systemic effects that don't change too fast).
What we see here is that just four states — New York, Massachusetts, Connecticut and New Jersey — are pulling the entire train by giving more to the federal project than they receive. However, if you take away the economic effect of defense spending (Raytheon, Lockheed Martin, Boeing, Northrop Grumman in Massachusetts and Connecticut) and of federally guaranteed student loans (especially in Massachusetts) their share will dwindle. Just four more states — huge California, midsize Minnesota and Colorado and tiny Utah — are also donors, but relatively minor ones.
A few more gray states manage to hold their own, for now: Texas because of energy, Washington because of Microsoft, Illinois because of Boeing and Nebraska which is too small to matter. And the rest are FEDERAL MONEY SPONGES. There is an entire continent's worth of insolvency coming up between the relatively rich New York and New England and the troubled but still rich California; what is going to hold them together? And then there are Alaska and Hawaii... aren't they Russian in any case? Alaska still is, by international law.
That, then, is the landscape of DSA — the Divided States of America. The Northeastern Agglomeration will somehow muddle through, as will California, but they will have precious little to do with each other and no compelling reason to stay united. There is nothing to hold the two coasts together except air freight (which is too expensive to account for much trade) and the Interstate Highway System — and who will pay for that, New York or California? Neither, I would think. The rail system in the US so tired that derailments happen several times a day; nobody will be able to keep it up either. The more fertile states of the Midwest and the South will simply disappear, eventually replaced by a new tribal Anabaptistan (that looks inevitable, given the relative birth rates). Alaska will scurry back to Russia; and I wouldn't even venture to guess what the future holds for Hawaii.
The switch-over from the United States of America to the Divided States of America will result in a new global economic pecking order: China will remain as #1, the USA, currently at #2, will vanish and India and Russia, currently at #3 and #4, will move up to #2 and #3. And with that the aberrant historical period during which the wrong side of the planet could tell the right side of the planet what to do will draw to a close.
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I've told people that national dissolution and Balkanization is the kindest option on the table for America. The responses are always emotional so tied to that tear jerker called "The United States" are most folks. Even if they haven't read the other tear jerker called "The Constitution", they will swear it's the most benevolent document created by man, such are our schools. I live in South Bend, Indiana the former feifdom of our current Secretary of Transportation. It's a failed city by my standards. All of the gold on Notre Dame's dome can't fix this place. It's progressively worsening with regards to crime, drugs and homelessness. This country boy is getting out.
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Troy Skaggs, so, I take it you would like to be an unpaid farm hand? If so, I think I have a situation for you. It's in Kentucky, though. Kentucky is a good choice because, looking at the map above, it will be one of two states (the other is Virginia) which will stop being states almost immediately.
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Dmitry Orlov, Good observation. Kentucky and Virginia are the original haunts of the Skaggs, itinerant farm labor for generations until the Depression forced them to Illinois. I help harvest tomatoes in late summer and after expenses don't have much left, so sustenance labor isn't ruled out.
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So you don't think Stephanie Kelton and the rest of the MMT brain trust can save America by printing even more money?
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Sean Thomas, MMT is neither modern, nor monetary, nor a theory and who the heck is Kelton anyway?
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Dmitry Orlov, She's been chosen by Wall Street to front for their hyperinflationary scheme. https://stephaniekelton.com/
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Perhaps some folks will consider Alaska as a retirement option.
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Dmitry Orlov, the collapse of the US will be no country for old men. Retirement will be sudden and violent, I think. Or lingering and unseen once they no longer have any physical possessions.
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Dmitry Orlov,  No.  Anticipation of Russia takeover as you suggested.
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Good writing and thoughtful insight. Immanuel Velikovsky wrote that dinosaurs have been discovered frozen in ice with green grass still in their mouths. In other words, they never knew what hit them. I fear this destiny is what awaits most US citizens, as they wolf down their holiday “food” and assume that our mutual parade will continue. It won’t.
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Don Hynes, Hmm. A little bit of a case of "missing information" here I think.  Not dinosaurs, but the wooly Mammoths and other similar kinds of beasts, much later than dinosaurs, and found in a virtually flash  frozen state across Northern Siberia and Canada.  Cause in truth unknown, but assumption without evidence - so common in modern day so-called Science, is that there was a sudden climate collapse into an ice age wiping out the animals of the North in hours. 
https://christiancourier.com/articles/the-woolly-mammoth-and-the-ice-age
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Pamela Storer, Correct Pamela. My error.
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The borders of US states are so silly and arbitrary that I really don't see the USA breaking up in just such a way. I see it in much more regional reactions, but knowing how irrevocably corrupt and degenerate the US is (and always has been), who knows?
I figure the fractures will be more ethnic than according to the artificial boundaries of states. Majority African descent areas, Scots-Irish southern Appalachia, Protestant New England, Jewish stetls, reformation of a few indigenous nations, return of Texas and the southwest to Mexico, Pacific northwest to Canada, Alaska back to Russia, Hawaii restored to the natives, etc.
The dissolution will be far more complete and irreversible than a possibly temporary fracture along those riculous state borders.
Mexico's former borders, for those interested. Hey, Mexico as an economic superpower. It could happen.
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James R Smith, the borders of failed states are always silly and arbitrary. They are wherever the locals decide to set up some road blocks. After that, they are shaken out as criminal gangs fight over territory.
I’ve read a lot of rumors about the alleged 150-year term for Alaska that would have expired in 2017. I say alleged because I’ve never seen it in writing anywhere. Is there some super-secret Tsarist archive I’m not aware of? Where did this rumor start?
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Dmitry Orlov, thank you for the explanation!
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Dmitry Orlov, reverting Alaska back to Russia would be some poetic justice, since we are told so much about "strategic defeat" and "decolonization" i.e., wanting to break up Russia into multiple statelets (per cretin criminally insane folks like Kaja Kallas and Andrzej Duda, and the likes on the DSA side), while these western countries can't even manage their own little affairs.
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This is a very interesting essay on some of the internal and external processes leading to a DSA, which many of us who don't live there
were either unaware of until recently or poorly informed about some relevant aspects. Thank you for another eye opener!
The timing is hard to forecast, other than "sooner than later". There are many external processes at play, of which some facilitate the collapse of the US$ (and the euro for that matter; the de-dollarization trend is gaining momentum by the minute), while others might delay it somewhat. Other than China holding huge $ reserves as treasury bills, there are other trillions of $'s owned cumulatively as reserve (not some stock option...) by huge corporations, families, countries, who would try to save the dollar to avoid their savings evaporate suddenly.
The numbers suggest that the collapse-inducing forces are winning, especially the "internal ones" are out of control. This process is simply unstoppable. Again.
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Istvan Almasi, According to Google AI (I'm too lazy to look any further), the volume of the FX market is $7.5 trillion per day. The insiders will have ample opportunity to bail into Yen, Yuan. HK dollars, Reais, Rubles, etc when the time is right. The bag holders will be stuck holding the bag.
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Back in 2015 I wrote a statement to some friends saying the USA would probably be broken into 3-4 "States" by around 2025-26 - I had been reading  Dmitri's work at the time. Think I'll sneak in? Of course, the downfall will also affect the vassal states like Australia whose governments have hopped into bed with those cretins ... live on 10 acres here - making preparations ... eating popcorn .....
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I think there are a number of people ‘on high’  that are salivating at the thought of the USA breaking up much in the same way they do at the thought of the same thing happening to the Russian Federation at the moment, if those people can’t complete their Global order agenda either or would suit their own interests….
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Pete M, reptiloids from Nibiru?
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Dmitry, like most Canadians, I am always interested in US developments (or devolution in this case), but would you have an opinion on the related and subsequent break-up of Canada?
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Moe Phufnik, that's already happened. Most provinces trade more with the US than with each other. Most Canadians live within 15 miles of the border. Once the US disunites, Canada will automatically follow.
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Question, pardon my ignorance, who is the US govt paying interest to? I know it's the fed, but who exactly runs the fed? Who gets all that money? Who owns our American asses?
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EEV, the US gov't is paying that interest to you. If it stopped, imports would stop and you'd starve.

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