Hello, everyone! The talk you are about to hear is the result of a
lengthy process on my part. My specialty is in thinking about and,
unfortunately, predicting collapse. My method is based on comparison: I
watched the Soviet Union collapse, and, since I am also familiar with
the details of the situation in the United States, I can make
comparisons between these two failed superpowers.
I was born and grew up in Russia, and I traveled back to Russia
repeatedly between the late 80s and mid-90s. This allowed me to gain a
solid understanding of the dynamics of the collapse process as it
unfolded there. By the mid-90s it was quite clear to me that the US was
headed in the same general direction. But I couldn't yet tell how long
the process would take, so I sat back and watched.
I am an engineer, and so I naturally tended to look for physical
explanations for this process, as opposed to economic, political, or
cultural ones. It turns out that one could come up with a very good
explanation for the Soviet collapse by following energy flows. What
happened in the late 80s is that Russian oil production hit an all-time
peak. This coincided with new oil provinces coming on stream in the West
- the North Sea in the UK and Norway, and Prudhoe Bay in Alaska - and
this suddenly made oil very cheap on the world markets. Soviet revenues
plummeted, but their appetite for imported goods remained unchanged, and
so they sank deeper and deeper into debt. What doomed them in the end
was not even so much the level of debt, but their inability to take on
further debt even faster. Once international lenders balked at making
further loans, it was game over.
What is happening to the United States now is broadly similar, with
certain polarities reversed. The US is an oil importer, burning up 25%
of the world's production, and importing over two-thirds of that. Back
in mid-90s, when I first started trying to guess the timing of the US
collapse, the arrival of the global peak in oil production was scheduled
for around the turn of the century. It turned out that the estimate was
off by almost a decade, but that is actually fairly accurate as far as
such big predictions go. So here it is the high price of oil that is
putting the breaks on further debt expansion. As higher oil prices
trigger a recession, the economy starts shrinking, and a shrinking
economy cannot sustain an ever-expanding level of debt. At some point
the ability to finance oil imports will be lost, and that will be the
tipping point, after which nothing will ever be the same.
This is not to say that I am a believer in some sort of energy
determinism. If the US were to cut its energy consumption by an order of
magnitude, it would still be consuming a staggeringly huge amount, an
energy crisis would be averted. But then this country, as we are used to
thinking of it, would no longer exist. Oil is what powers this economy.
In turn, it is this oil-based economy that makes it possible to maintain
and expand an extravagant level of debt. So, a drastic cut in oil
consumption would cause a financial collapse (as opposed to the other
way around). A few more stages of collapse would follow, which we will
discuss next. So, you could see this outlandish appetite for imported
oil as a cultural failing, but it is not one that can be undone without
causing a great deal of damage. If you like, you can call it
"ontological determinism": it has to be what it is, until it is no more.
I don't mean to imply that every part of the country will suddenly
undergo a spontaneous existence failure, reverting to an uninhabited
wilderness. I agree with John-Michael Greer that the myth of the
Apocalypse is not the least bit helpful in coming to terms with the
situation. The Soviet experience is very helpful here, because it shows
us not only that life goes on, but exactly how it goes on. But I am
quite certain that no amount of cultural transformation will help us
save various key aspects of this culture: car society, suburban living,
big box stores, corporate-run government, global empire, or runaway finance.
On the other hand, I am quite convinced that nothing short of a profound
cultural transformation will allow any significant number of us to keep
roofs over our heads, and food on our tables. I also believe that the
sooner we start letting go of our maladaptive cultural baggage, the more
of a chance we will stand. A few years ago, my attitude was to just keep
watching events unfold, and keep this collapse thing as some sort of
macabre hobby. But the course of events is certainly speeding up, and
now my feeling is that the worst we can do is pretend that everything
will be fine and simply run out the clock on our current living
arrangement, with nothing to replace it once it all starts shutting down.
Now, getting back to my own personal progress in working through these
questions, in 2005 I wrote an article called "Post-Soviet Lessons for a
Post-American Century". Initially, I wanted to publish it on a web site
run by Dale Alan Pfeiffer, but, to my surprise, it ended up on From The
Wilderness, a much more popular site run by Michael Ruppert, and, to my
further astonishment, Mike even paid me for it.
And ever since then, I've been asked the same question, repeatedly:
"When? When is the collapse going to occur?" Being a little bit clever,
I always decline to give a specific answer, because, you see, as soon as
you get one specific prediction wrong, there goes your entire
reputation. One reasonable way of thinking about the timing is to say
that collapse can occur at different times for different people. You may
never quite know that collapse has happened, but you will know that it
has happened to you personally, or to your family, or to your town. The
big picture may not come together until much later, thanks to the
efforts of historians. Individually, we may never know what hit us, and,
as a group, we may never agree on any one answer. Look at the collapse
of the USSR: some people are still arguing over why exactly it happened.
But sometimes the picture is clearer than we would like. In January of
2008, I published an article on "The Five Stages of Collapse," in which
I defined the five stages, and then bravely stated that we are in the
midst of a financial collapse. And ten months later it doesn't seem that
I went too far out on a limb this time. If the US government has to lend
banks over 200 billion dollars a day just to keep the whole system from
imploding, then the term "crisis" probably doesn't do justice to the
situation. To keep this game going, the US government has to be able to
sell the debt it is taking on, and what do you think the chances are
that the world at large will be snapping up trillions of dollars of new
debt, knowing that it is being used to prop up a shrinking economy? And
if the debt can't be sold, then it has to be monetized, by printing
money. And that will trigger hyperinflation. So, let's not quibble, and
let us call what's happening what it looks like: "financial collapse".