Is Europe’s SWIFT Alternative the Beginning of the End for the Dollar?

Is Europe’s SWIFT Alternative the Beginning of the End for the Dollar?

After threats to establish its own alternative system to enable trade with Iran failed to move the United States government, the European Union went ahead with its plans to operate a “special purpose vehicle” to enable European countries to trade with Iran. The vehicle, known as the Instrument in Support of Trade Exchanges (INSTEX) will initially focus on pharmaceutical, medical, and food products, which are expressly permitted for humanitarian reasons. But the potential for using INSTEX to sidestep sanctions and enable normal trade in other goods still exists. If Europe does decide to flout the sanctions it could be yet another nail in the dollar’s coffin.

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Europe in the post-Soviet area isn’t willing to be the American vassal that it was during the Cold War. The development of the European Union was in part due to the desire to unite the continent’s economies into a powerhouse that could rival the US. Yet the US government continues to treat Europe like a little child, demanding that Brussels cater to Washington’s every whim. It’s no wonder that Europeans are getting tired of being told what to do, with their businesses facing threats of punishment if they dare to trade with countries that the US doesn’t want them trading with.

In the days after World War II the United States was undoubtedly the world’s largest and most powerful economy and the dollar the world’s most desired currency. And in the aftermath of the Cold War the US stood atop the world as the sole surviving superpower. That combination of economic and military might went to politicians’ heads, so that even with an ever-expanding national debt that now exceeds $22 trillion and a military that has been bogged down in quagmire after quagmire across the globe those politicians want to get even more involved in deciding what other countries should and should not do.

The United States doesn’t realize that it is no longer the world’s hegemon. It doesn’t realize that the dollar is growing more and more worthless every year. It doesn’t realize that China is adopting capitalism almost as quickly as the US is embracing socialism. It doesn’t realize that at this rate in a couple of decades the US will look more like Argentina or Venezuela than it will a strong, vibrant economic power. In short, American politicians still think they’re on top of the world when in fact they are leading the country into a precipitous decline.

That’s not good for anyone, but especially not for Americans who still cling to dreams of a comfortable retirement. With Washington not willing to restrain its spending and looking to try to flex whatever economic muscle it still has left to force other countries to bend to its will on trade, the US is slowly pushing away its friends, allies, and trading partners. By the time it finds itself well on the road to decline, the damage will already have been done.

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With no signs of a reversal evident, investors need to remain aware of the dangers to their assets, ensuring that they keep their investments not only from losing value, but also keep them away from the prying hands of a government that will seek to take more and more money from taxpayers to keep itself afloat. They need to invest in assets like gold that are tangible, not subject to devaluation when the dollar collapses, and that will protect their hard-earned wealth. It won’t be impossible to live in relative comfort in the face of economic decline, but hard work and investing in assets like gold will be vitally important and will go a long way towards helping you maintain your current standard of living.