The U.S. dollar has long been considered a pillar of global financial stability. But for high-net-worth families seeking to preserve multigenerational wealth, growing economic and political pressures are raising serious concerns about the dollar’s long-term purchasing power. Inflation, rising federal debt and worsening fiscal imbalances create a challenging environment for estate planners and wealth advisors tasked with protecting capital across generations.
In this evolving landscape, one solution is gaining urgency: global investment diversification. By reallocating part of their portfolios to assets held outside the United States, particularly in stable jurisdictions like Switzerland, families can hedge against the risks of dollar devaluation and preserve wealth in a more resilient and legally secure manner.
The Dollar’s Structural Weakness
Over time, inflation has steadily eroded the U.S. dollar’s purchasing power. But today’s pressures are different in scale and scope. According to data from the U.S. Treasury Department, the national debt has surpassed 123% of GDP. Levels previously seen only during wartime. This spike is largely attributable to spending tied to the COVID-19 pandemic, military engagements in Iraq and Afghanistan and the 2008 financial crisis. From fiscal year 2019 to 2021, federal spending increased by nearly 50%, due to stimulus programs, tax cuts and unemployment-related revenue shortfalls.
More concerning still is the cost of servicing this debt. The U.S. Treasury reports that net interest payments are now the third-largest federal budget item, trailing only Medicare/Medicaid and Social Security. These payments exceed even U.S. defense spending, placing growing pressure on the federal budget and increasing the risk of fiscal instability.
At the same time, political voices openly advocate for policies that would weaken the dollar. According to Politico, economic advisors close to President Donald Trump are considering strategies to deliberately devalue the currency to stimulate U.S. exports. While this may deliver short-term trade benefits, it could accelerate inflation and significantly diminish the real value of dollar-based assets.
Adding to this complex picture, credit ratings agency Moody’s downgraded the U.S. sovereign credit rating by one notch to Aa1, citing the continued growth of the national debt and rising debt servicing costs amid still-high interest rates. This downgrade marks a significant milestone: With Moody’s action, the U.S. government has lost its last AAA rating from a major credit agency. S&P downgraded the U.S. in 2011, and Fitch followed in 2023. The loss of this top-tier credit status underscores growing concerns over the long-term sustainability of U.S. fiscal policy and further erodes confidence in the dollar’s stability.
The current situation could worsen, as the reconciliation bill under consideration sets up a potential $4.8 trillion fiscal cliff in 2028 by front-loading tax cuts and spending increases while delaying cost-saving measures. Many provisions, such as individual and business tax breaks and increased defense spending, are set to expire, creating political pressure for costly extensions. If lawmakers extend these policies, the national debt could rise sharply, mirroring past patterns seen after the 2017 Tax Cuts and Jobs Act. Without permanent, fully offset reforms, the bill risks adding significantly to long-term deficits.
Taken together, these trends point to an increasingly fragile outlook for the U.S. dollar and an urgent need to explore solutions that extend beyond national borders.
The Role of International Diversification
International diversification is a powerful strategy for managing the risks associated with currency depreciation and domestic economic volatility. By investing in assets denominated in foreign currencies and held in other jurisdictions, families can reduce the correlation of their portfolios to U.S.-specific events and policies.
Currency diversification is especially important. When the U.S. dollar weakens, foreign-held assets, particularly those denominated in more stable currencies, may increase in relative value. This helps preserve purchasing power and protect long-term capital.
Moreover, global investing offers exposure to different economic cycles and sectors. Many foreign markets are less tightly linked to U.S. performance and may present unique opportunities in energy, healthcare, and manufacturing areas.
For high-net-worth families with long-term goals, international diversification can reduce portfolio volatility, improve returns, and provide a crucial safeguard against systemic risks in the U.S. economy.
Switzerland: A Model of Financial Stability
Switzerland is a particularly attractive destination for wealth preservation among the world’s financial centers. Its long-standing tradition of neutrality, low inflation and conservative fiscal policy make it a highly stable jurisdiction for international investors.
The Swiss franc has historically been one of the most stable currencies globally. It’s supported by prudent government spending, an independent central bank and a long track record of low inflation. Holding assets in Swiss francs can offer an effective hedge against dollar devaluation.
Switzerland also has one of the world’s most robust financial regulatory frameworks. The Swiss Financial Market Supervisory Authority provides stringent oversight of financial institutions, ensuring a high level of legal security and investor protection. Some Swiss asset managers are also registered with the U.S. Securities and Exchange Commission, ensuring compatibility with U.S. compliance standards.
Practical Considerations for Advisors
Implementing an international strategy requires thoughtful planning and the right partnerships for estate planners and financial advisors. It’s essential to work with licensed professionals who understand both U.S. and foreign regulatory requirements and can structure investment portfolios in a tax-efficient and legally compliant way.
It’s also beneficial to collaborate with a network of professionals, including international tax attorneys, CPAs and cross-border wealth management experts, who can ensure that offshore strategies integrate smoothly with domestic estate plans.
A Global Approach
The decline of the U.S. dollar isn’t a speculative risk. It’s a documented trend rooted in fiscal realities and political decisions. For advisors charged with stewarding family wealth across generations, staying anchored solely in the U.S. presents growing vulnerabilities.
By adopting a global investment approach and incorporating jurisdictions like Switzerland into long-term strategies, advisors can help clients preserve purchasing power, mitigate risk, and ensure that legacies endure.
In a world where economic uncertainty is the new normal, protecting wealth means thinking and acting beyond borders.
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