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The trouble with a dictatorship such as Kim Jong-un's is that whatever traditional diplomatic or trade steps other countries take -- sanctions, public shaming, even threats -- do not seem to work. His regime keeps shooting missiles and threatening the world, and especially the U.S., with nuclear annihilation.

The main reason traditional ways of dealing with the crisis do not work is that Kim Jong-un and his acolytes in power do not give a damn about ordinary North Koreans. That's the essence of a dictatorship: the dictator cannot be voted out of power, so the dictator does not need to pay attention to public opinion.

On a humanitarian level, this situation has led to a catastrophe for the people of North Korea; more than 70% of the estimated 25 million people living there suffer from "food insecurity and undernutrition," a recent United Nations report shows.

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In other words, 70% of North Koreans are hungry. According to the report, 41% of the population is undernourished. Their chubby leader is definitely not living like ordinary North Koreans do. Apparently, last year the shortages of food were so bad that daily rations of staples such as cereals and potatoes were cut to 300 grams per day from 380 grams previously. That's two small potatoes per day, according to a calorie-counting website.

Proposed new sanctions that some have advocated in the West to rein in Kim Jong-un's erratic behavior are likely to worsen that plight.

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And yet, the North Koreans seem to be in awe of their leader. We all have seen videos of North Korean women crying at the sight of him (presumably, those were tears of happiness) and of adoring crowds applauding him wherever he goes. The few North Koreans who have made it out talk about relentless media propaganda stating that the beloved leader cannot sleep at night because he worries so much about his people going hungry.

These dissidents also say that they were afraid to tell relatives about their plans to leave the country because their relatives were so indoctrinated by the regime they would have turned them in to the authorities. They also say that, even when North Koreans watch films smuggled from China that show gleaming skyscrapers, plenty of food and fast trains, many believe they are all made up.

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Statements such as these create the image of a people who are completely subjugated and resigned to their fate. This is perhaps why the markets do not price in the possibility of a revolt by the North Korean people against the regime. But the latest missile strike indicates that this is a mistake. In a dictatorship, when the regime lies to the people, the people lie to the regime as well.

Kim Jong-un may be unstable, but he is not stupid, and neither are his advisers. They know that North Korea has no chance to defeat the U.S. in a war, and they also know that escalating this conflict will lead to a very unpleasant end for themselves.

The fact that he went ahead with this strike, which is very risky internationally, seems to indicate that internally things are so bad that he would do anything to keep people from revolting. It is very possible that he is worried that North Koreans have had enough of being hungry and afraid and will try to topple him; he is therefore trying to destroy any feelings of revolt by creating the illusion of an external threat that only he can deal with. 

Those who think this is a fantasy should remember all the things that came out after the fall of the Berlin Wall about life behind the Iron Curtain.

Those adoring Romanians applauding dictator Nicolae Ceausescu wherever he went? They were pretending. Those diligent Hungarians, Poles, Czechs, working tirelessly to "build the communist society," as was the slogan at the time? They were pretending, too.

It is difficult to say to what extent people in a dictatorship believe the regime's lies, as a dictatorship, by definition, does not allow its people to speak freely. But if events in Eastern Europe are anything to go by, the North Korean missile launch could be the sign of a dictator who is increasingly afraid of a popular revolt.

The big unknown in this is China, North Korea's closest ally. China is in a difficult position because it cannot criticize the North Korean regime too harshly as its own communist regime is a dictatorship as well, albeit one with a human face, so to speak. At the same time, it is clearly getting fed up with Kim Jong-un's antics, so it probably will not side with him in case of popular revolt.

At this point, popular revolt in North Korea seems unlikely to many. After all, people who only have two small potatoes a day to eat don't have much strength. On the other hand, hunger pushes people to desperate acts. The markets tanked on Tuesday morning after Kim Jong-un fired the missile over Japan. But investors should look beyond the immediate fear to the longer-term possibilities.

(This article originally appeared at 8:00 a.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Antonia Oprita, Jim Cramer and other writers even earlier in the trading day.)

Editors' pick: Originally published Aug. 29.

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