Back in October a European diplomat had a warning for Washington.



“At the moment, sanctions are effective because of US financial dominance as the global reserve currency — forcing SWIFT out of Iran could incentivize China or Russia to establish their own SWIFT system, which is not in any of our interests,” the diplomat told the Washington Examiner. “What is going on with SWIFT could also be applied to Russia or China,” a European diplomat said. “And then what is going to happen to the financial system as a whole?”

The U.S. didn't listen, and immediately threatened to sanction the SWIFT banks if they didn't kick Iran out. SWIFT folded under the pressure, but that only triggered the next step.

Two days ago the EU set up a SWIFT alternative in order for EU companies to skirt U.S. sanctions.

Something even more important happened one day earlier.



A special financial mechanism aimed at maintaining trade ties between Switzerland and Iran is ready for implementation, according to Sharif Nezam-Mafi, the head of the countries’ joint chamber of commerce. He told IRNA news agency that the clearing house will be used to facilitate Iran’s oil transactions with its major Asian crude customers – namely India, China and South Korea.

The Swiss have created an alternative financial clearing house for the rest of the world, and no one is talking about it.

Russia had created their own SWIFT alternative months earlier.



Russia has already worked out a cooperation mechanism with Tehran and mentioned the possibility of direct transactions with Iranian companies, according to the MP. The Central Bank of Russia, which has developed the SPFS, said earlier that 416 Russian companies and government organizations had joined the system as of September. They include the Russian Federal Treasury and large state corporations, including Gazprom Neft, Rosneft, and others.

Russia expects to be locked out of the U.S.-dominated financial system forever, and are planning accordingly.

Russia's central bank is selling dollars in order to buy enormous amounts of gold.

Russia isn't alone. The dollar’s share of global central-bank reserves have fallen to the lowest level since 2013.

For now China's banks remain in the SWIFT system, but that doesn't mean that China isn't undermining Dollar Hegemony. They are just doing it on the demand side.



The exclusivity of the U.S. dollar as a vehicle for global crude oil trading is increasingly being challenged by other currencies...

The launch by the Chinese government in March of yuan-denominated oil futures trading on the Shanghai International Energy Exchange has reinforced the Chinese currency's presence in crude oil markets. The daily trade volume on the Shanghai market topped 500,000 contracts many times in December -- with each contract for 1,000 barrels of crude. Transactions have doubled over the past six months. Trading volumes for Shanghai's yuan-denominated oil futures have already overtaken those of the rival Dubai Mercantile Exchange and sometimes come close to those of North Sea Brent, an international crude oil benchmark.

Individually these actions don't mean much, but collectively they amount to a trend that was unimaginable just a decade ago.

The reasons for this trend date back to 2001, but Trump has put it into overdrive.

On one hand, Trump is imposing sanctions at a record pace.



On the other hand, we are dramatically cutting back on foreign aid.



US aid to countries fell from $50 billion in fiscal year 2016, $37 billion in 2017 to $7.7 billion so far in 2018. A world less tied to American largesse and generous trade tarrifs can more easily reject the “you are with us or against us” bullying doctrine of US presidents. In the carrot and stick approach that largely passes as American foreign policy, the stick loses power as the carrot vanishes.

Should it be a surprise that the nation with a bloated military and an understaffed diplomatic corps acts like a schoolyard bully?

The irony is that our financial imperialism is coming to an end, not because of left-wing opposition (which has been mostly neutered since the 1990's), but from the right-wing.



A point had to come where this policy collided with the self-interest of other nations, finally breaking through the public relations rhetoric of empire. Other countries are proceeding to de-dollarize and replace what U.S. diplomacy calls “internationalism” (meaning U.S. nationalism imposed on the rest of the world) with their own national self-interest. This trajectory could be seen 50 years ago (I described it in Super Imperialism [1972] and Global Fracture [1978].) It had to happen. But nobody thought that the end would come in quite the way that is happening. History has turned into comedy, or at least irony as its dialectical path unfolds. For the past half-century, U.S. strategists, the State Department and National Endowment for Democracy (NED) worried that opposition to U.S. financial imperialism would come from left-wing parties. It therefore spent enormous resources manipulating parties that called themselves socialist (Tony Blair’s British Labour Party, France’s Socialist Party, Germany’s Social Democrats, etc.) to adopt neoliberal policies that were the diametric opposite to what social democracy meant a century ago. But U.S. political planners and Great Wurlitzer organists neglected the right wing, imagining that it would instinctively support U.S. thuggishness. The reality is that right-wing parties want to get elected, and a populist nationalism is today’s road to election victory in Europe and other countries just as it was for Donald Trump in 2016. Trump’s agenda may really be to break up the American Empire, using the old Uncle Sucker isolationist rhetoric of half a century ago. He certainly is going for the Empire’s most vital organs.

In a perfect world, the American Empire would pull back voluntarily and peacefully and without a crisis.

But that is never going to happen because TPTB won't let it happen.

Instead the American Empire will end when with a financial crisis caused by a plunging dollar that makes our Empire unaffordable.

“I am always on the side of the revolutionists, because there never was a revolution unless there were some oppressive and intolerable conditions against which to revolute.”

- Mark Twain