Trump's New Dollar Weapon Has Begun │ Brent Johnson

Added: 2026-05-30

[00:00:00]the United States can weaponize a swap line or weaponize the dollar if they choose to [music] do so.

[00:00:06]>> Brent Johnson called the dollar milkshake theory in 2018. What is the theory? When the next global debt crisis hits, the dollar doesn't die. It sucks up liquidity from every other currency on Earth like a straw in a milkshake.

[00:00:23]Everyone said he was wrong. Eight years later, he's still right and the milkshake is about to get sucked dry.

[00:00:30]>> Gold fell.

[00:00:31]The reason gold fell was because of the risk associated with the war.

[00:00:36]There was a credit squeeze, dollar funding became harder to get, and so these countries started selling gold to get dollars.

[00:00:47]In the last three or four months, Russia has sold gold, Turkey has sold gold, the Gulf states have sold gold.

[00:00:54]>> That was when Iran kicked off. Gold should have ripped. Instead, it crashed because when the milkshake triggers, everything gets sold for dollars. Even your bank account isn't [music] safe.

[00:01:07]>> If you have your money in a bank and a crisis breaks out and you try to go get it, they might not give it to you.

[00:01:13]In fact, this Turkish Central Bank might take those dollars for themselves. And that has happened before. That this is not some theoretical hypothetical situation.

[00:01:21]>> Here's why you should trust him. Years ago, a guy named Max told Brent that Tether would re-dollarize the world.

[00:01:28]Brent disagreed. On this show, he looked at me in the eye and said Max was right.

[00:01:34]He was wrong. That's the guy you want calling the next crisis. He told me the trigger event he sees coming. The one asset that gets crushed first and what Trump actually does when Europe shows up at the Fed begging for dollars. Spoiler, he doesn't say no. He says something much worse. If you own Bitcoin, gold, or a dollar of anything, watch this one twice, guys. And again, remember, nothing in this video is financial advice. It's for educational purposes only. Without further ado, let's bring Brent to the stage.

[00:02:10]Brent, thank you for coming. You know, like I was telling you right before we started recording, anyone like any good Bitcoiner would probably know you maybe by name or just by, you know, kind of this uh I don't know if you'd call it a theory, philosophy, an idea, whatever. Uh the dollar milkshake theory that you invented in 2018. Certainly, that's how I know you without actually ever knowing you and putting a face to the theory.

[00:02:35]So, great to actually meet you and happy to have you here as I've been looking at your work for a while and finally get to talk to you about it. Um people have been calling for the death of a dollar the dollar for a while. I mean, you know, I'm kind of guilty of it, too, as we saw the BRICS nations rising, things like that.

[00:02:54]Um but I think that you have a bit of a different perspective on that. So, where are we today in 2026 with these things that are happening?

[00:03:04]Uh you know, there's a lot of a lot of kind of speculation um within geopolitics that's, you know, Trump would like to see a weaker dollar.

[00:03:14]Uh you know, a lot of people said that the dollar that that we were losing the dollar world reserve currency. The the amount of dollars held in reserve globally was dropping down.

[00:03:25]Um so, maybe you can give us a bit of a bit of a color around all that.

[00:03:30]>> Sure. Well, first of all, thank you for having me. I'm happy to talk to you. Um and I I think one thing that's always important to point out and I've said this from the very first time I ever said the two words dollar milkshake together was that when I talk about a strong dollar, I'm talking about relative to other currencies. And it's it's fiat peers.

[00:03:49]And And reason that's important is because that's what the world runs on.

[00:03:53]Whether we like it or not, that is what governments have chosen to run on.

[00:03:58]And fiat currency does not hold value.

[00:04:01]It loses value over time. It's kind of designed to lose value over time. If governments wanted a currency that did not lose value over time, they would have stuck with the gold standard or some other kind of hard money substitute, perhaps Bitcoin.

[00:04:14]But they don't want that, right? And the fact is is if all fiat uh then I will often be told, "Well, if all fiat currencies lose value, why does it even matter which one is strong and which one isn't?" And it The thing is is it matters a lot. And the reason it matters a lot is because the whole world runs on dollars. Again, whether you like it or not, that's currently a fact. And if then when the dollar rises versus foreign currencies, it causes a crisis.

[00:04:40]It causes a credit contraction in the overall economy. It slows down the global economy, and it can eventually lead to uh a currency crisis whether uh you know, on a country level or a global level.

[00:04:53]And so, my whole framework has been to try to explain why it's important and why it continues to happen, and why the continual calling for the death of the dollar is incorrect. Now, that doesn't mean that you shouldn't own gold or Bitcoin or or or stocks or real estate because you know, you don't just want to sit in cash, quote unquote.

[00:05:17]Uh but I think the whole dollar milkshake framework, if you understand what the framework says and if you understand why persistent dollar strength versus fiat currencies has the potential to uh negatively affect capital markets, then I think it's a very good uh a framework via which to view the world.

[00:05:37]>> So, that that framework essentially is that the that the United States United States dollar is going to continue to remain the world reserve because everybody needs a dollar or maybe you can just clarify that a little bit.

[00:05:51]>> Sure. Yeah, so the first thing you got to understand is that in the current monetary system, whether you're talking about Europe, Africa, the United States, Australia, the monetary system is debt-based, which means money gets loaned into existence, right?

[00:06:06]>> Yeah.

[00:06:07]>> And so only the base money, only the physical currency and coins that exist and the reserves that sit at the central bank are not somebody else's debt.

[00:06:18]And so that debt creates demand for the currency.

[00:06:24]What makes the US dollar different is that the United States only uses the dollar. So whether they are investing internally and borrowing internally or investing and borrowing on the global stage, they're borrowing in dollars. And that's a currency that the United States can print for lack of a better way of saying it.

[00:06:45]The rest of the world does not have that ability. They have their own local currency that is loaned into existence, but then to operate on the global stage, they also have to have US dollars.

[00:06:59]The problem with that is that they now have one of those currencies because they trade relative to each other, one of those currencies will always be going against them. What I mean by that is if you are an exporting country and the dollar falls, well, that makes it easier for you to get dollar funding on the global stage, but it also makes your local currency stronger and hurts your exports. And as your exports start to get hurt, that puts downward pressure on your overall economy.

[00:07:31]The vice versa is if you have a local currency that's cheap, that helps your exports, but the problem is to operate on the global stage, everything now costs more. So now you're getting squeezed from the bottom up. So, on one hand you're getting squeezed from the top side down, on the other hand you're getting squeezed from the bottom side up, but one way or the other, for every country other than the United States, they're always getting squeezed on one side or the other.

[00:07:55]And if the dollar remains in a band, the dollar index, so if the dollar index remains in a band, then everything can kind of function appropriately, but if it gets too high or it gets too low, real problems start to happen. And until there's a viable substitute, and when I say viable, I don't just mean that operationally works, I mean that enough people on the global stage adopt, accept, you know, borrow and, you know, agree to distribute, etc., etc., etc., there you're you're you're stuck. It's kind of a dollar prison. Now, and that can be fantastic for asset prices or it can be really poor for asset prices, but it does affect them.

[00:08:36]>> Yeah, I mean, for most of my audience who's, you know, uh crypto native, crypto curious, you know, some somewhere in the audience in the market, we've kind of always we've kind of always pegged, you know, a strong dollar with uh with kind of a weak crypto like a weak market, right? You want to see that dollar getting weaker. If the DXY goes up, you know, the Bitcoin goes down. Um >> Right.

[00:09:03]>> Does that does that kind of always hold true and you see that happening as as we move forward? Because if if the dollar milkshake theory, which assumes a stronger dollar, right? Um if that's kind of coming into play and the dollar increases in in strength, uh what's that going to do for our markets?

[00:09:21]>> Yeah, so it doesn't have to be the case, but it typically is. And so I'll I'll I'll explain what I mean.

[00:09:28]As I said earlier, even though the dollar may remain strong against its fiat peers, it can lose it can still lose purchasing power. We've seen that over the last couple years, right?

[00:09:37]>> Right.

[00:09:38]>> So, if all currency gets debased against real things, then you could have gold rising, stocks rising, real estate rising, Bitcoin rising versus the dollar, but rising even more versus all the foreign currencies. That is possible. The problem though, the challenge, is that if the dollar rises too much versus foreign currencies, this is what I was talking about, it starts to put pressure on the rest of the world. And as you start to get pressure put on an economy, because the whole world runs on credit, it's a loaned into existence, you have you run the risk of having a liquidity crisis.

[00:10:20]And in a liquidity crisis, as you get this credit contraction, and everybody scrambles just for dollars, they end up selling things, assets, that they might not otherwise want to sell, but they have to sell because they need dollars to operate, or they need to to you know, they have to pay their mortgage, or they they have to pay off this dollar debt to get more funding. And so, you run the risk of you know, you can have assets going up and up and up as free currencies but then you you get a liquidity crisis and it it it gaps down.

[00:10:51]And then perhaps it goes up again, then it gaps down. So, the these gaps down, these are largely in in and I'm not just talking Bitcoin.

[00:10:59]It can be crypto, it can be stocks, real estate.

[00:11:03]Part of the reason that we have had these shocks over the last, let's just call it 20 years since the global financial crisis, is because the debts keep getting bigger and bigger. And as the debts keep getting bigger and bigger, the more likely you're going to have a credit crunch at some point. And the credit crunch is what leads to a liquidity crisis. And when there's a liquidity crisis, people sell what they can, not what they want to, right?

[00:11:26]>> Right.

[00:11:26]>> And so so so that's the so it doesn't So, a strong and one thing I've always said is there is nothing more bullish for gold. I haven't really said this for Bitcoin, but what I've said for for gold is that there's nothing more bullish for gold than a strong dollar. Because a strong dollar will literally wreck the entire global monetary system. It's not designed to have a strong dollar.

[00:11:48]And so if the dollar gets too strong, it will wreck the monetary system and that would ultimately be good for gold or any other tail risk or or or store of long-term store of value.

[00:12:00]It doesn't mean it will be a peaceful ride along the way. It could be extremely volatile ride, but but I but I I've said many times that a strong dollar is actually a bullish thing for for for precious metals.

[00:12:14]>> Well, so What you've been talking about quite a bit lately is swap lines and you know, I'm not too familiar. I I know a little bit because I have you know, preparing for this watched a couple of your episodes, but I didn't really know too much before and so it'd be great if you can kind of explain swap lines in a very simple to understand way cuz it can be a little complex.

[00:12:37]But what exactly are they and why are you talking about them so much right now?

[00:12:42]>> So swap lines are essentially a way for the United States to get US dollar funding to the rest of the world in some kind of a liquidity crisis.

[00:12:53]So let me explain why that's important.

[00:12:55]So as I said earlier, all countries loan money into existence. That's just the way the system is set up.

[00:13:02]But there is a market outside the United States called the Eurodollar market. Now that's not the Euro currency, it's just called the Eurodollar market. So anytime there's a dollar transaction or a dollar deposit or some kind of a dollar investment outside the United States made between parties that are not American.

[00:13:21]That's a Euro >> Even if it's Asia for example or something.

[00:13:25]>> Yes. So as an example, if France is trading with Turkey and the invoices are denominated in dollars, that's a euro-dollar invoice.

[00:13:33]>> Okay.

[00:13:33]>> Or if Thailand is doing business with the Philippines and it's invoiced in US dollars because US dollars is what global commodities trade in, that's a euro-dollar transaction, right?

[00:13:44]>> Thank you.

[00:13:45]>> And so, the the issue is that the way you create money is you loan more money into existence.

[00:13:53]But, that if you loan money into existence, you're risking your own balance sheet, you're risking your own safety net to do that. The only entity that can issue new money into existence without risking their own balance sheet is the central bank.

[00:14:09]But, the Thai Central Bank, the Turkish Central Bank, the ECB Central Bank, they cannot issue dollars. They can only issue euros or lira, whatever it is. So, when you get into a credit crunch in the euro-dollar market and you need new liquidity to plug that hole, there's nobody that can plug that hole without risking their own balance sheet to do it, other than the United States.

[00:14:33]>> Mhm.

[00:14:34]>> So, this is where swap lines come in.

[00:14:35]The way that the United States will plug help or try to plug that hole is they will give a swap line to the ECB, they'll give a swap line to Brazil, they'll give a swap line to Australia, whoever requests it. And this is a loan that the United States gives a short-term loan to this other central bank.

[00:14:58]That central bank then loans those dollars out to their banks and those banks then loan those dollars out to whatever their their their corporate clients that need dollar funding.

[00:15:10]And then, to do that, they they park their currency at the Fed. So, if we give a billion dollars to Europe, Europe gives a billion euros to the United States.

[00:15:22]That's the collateral. So, if we never got that loan paid back, we could sell those euros on the open market and recover our our money that way.

[00:15:31]So, this is a >> In in a in a country like Turkey, for example, where the lira is really struggling right now, a swap line created in a US central bank or Fed to the Turkish central bank, that would be an over collateralized loan, I'm guessing, right? I mean, it needs to be able to >> Well, yeah. Well, first of all, the US would not give a swap line to Turkey.

[00:15:59]Turkey Turkey, you know, but but this is this is where it gets important.

[00:16:05]Is there's certain there are certain central banks that the United States will give a swap line to and historically, they've been fairly lenient when giving out swap lines.

[00:16:17]But, the point I've tried to make is they don't have to be lenient. Number one, they don't even have to provide it.

[00:16:24]Number two, they don't have to provide good terms if they do provide it. Right.

[00:16:29]Number three, they could they they they could attach some very severe strings if they decide to do it or they could just withhold it totally and watch that country's, you know, economy fall.

[00:16:41]And I'll give you two examples recently.

[00:16:45]One is one where a swap line was extended and another one is where the opposite was done. So, last fall, Argentina got in trouble. They were having a currency problem with the Argentinian peso and people were starting to lose faith in the Argentinian government. So, the United States gave them a swap line. And the fact that the United States gave them a swap line provided confidence to international investors that that Argentina was going to make it through. And so, that helped that that that solved the problem, right? The opposite is Iran. Over the last couple years has had, you know, problems. And this year this last year, instead of providing the swap line, what the US Treasury did is they actually deliberately withheld or prevented Iran from getting dollars.

[00:17:35]That is what then led the Iranian currency to fall dramatically.

[00:17:41]They had high levels of inflation, and that is what then caused the citizens to go out and protest in the street. Be So, before, you know, the United States and Israel started their campaign against Iran in late February, in January and February, there was mass protests in Iran because the local citizens were unhappy uh with the inflationary levels and what the what the what the government was doing from a monetary perspective. So, that that's kind of two polar extremes, but it shows the benefit of being able to have a swap line or get a swap line if and when it's needed. And that also shows how the United States can weaponize a swap line or weaponize the dollar if they choose to do so.

[00:18:27]Um and and what one thing I would say to this is I know I'm sure there's some people out there saying, "Well, the United States shouldn't do that." Well, perhaps you're right, but you know what?

[00:18:36]They do. And so, that's the real world that you have to deal with, right? And I don't think the United States is going to become more liberal with swap lines.

[00:18:44]I think they'll become more strict with them in the future. And I think that has major consequences for the rest of the world, and I think that is one of the reasons why the dollar, if all fiat fails, the dollar will be the last to fail. It's not going to be the first to fail.

[00:19:00]>> We just touched on this, but I was wondering if you could just go a little bit deeper. Uh you gave us one example of how swap lines could be used as a geopolitical weapon in the case of Iran.

[00:19:11]Um but can you just elaborate on that a little bit more because a lot of the analysts call swap lines bailouts, but I think you specifically call them geopolitical weapons.

[00:19:19]>> Well, so part of the reason that the United States has extended swap lines, let's call it to our allies for lack of a better way of saying it, is because when there is a downturn in their local economies and they start to get squeezed, what do they do? They rob their piggy bank, right? They sell their assets and then use the the the proceeds to go pay their debts.

[00:19:46]Well, it just so happens, and this is part of the milkshake as well as that I've said for many years, the United States sucks up capital from all over the world, all over the institutions, uh companies, countries from all over the world, they invest their excess profits back into the United States, whether it's Treasury bills, whether it's real estate, whether it's United States stocks, you know, equities.

[00:20:10]And so, when that country comes under pressure, they need to tap their piggy bank. What do they do? They sell United States dollar assets, whether it's stocks, bonds, real estate. That puts pressure on US markets.

[00:20:23]So, in those scenarios, the United States will often say, "Don't sell your US Treasuries. Don't sell your US stocks. Don't sell your US real estate.

[00:20:32]Take the swap line instead. We'll give you a low-cost line of financing so you don't have to sell your assets. You don't have to further disrupt cuz remember, when people are taking these swap lines, it's because they're under stress and it's because there's some kind of a crisis.

[00:20:53]They don't want The United States doesn't want that crisis to get furthered by starting to sell US dollar assets, right?

[00:21:00]So, now is this a bailout of the United States?

[00:21:04]You You argue it is because we are trying to prevent foreigners from selling US dollar assets.

[00:21:11]>> Mhm.

[00:21:12]>> So I So I don't deny that there is a bailout aspect to it.

[00:21:18]But what I would say is it is not a bailout aspect where the United States is getting the shorter end of the stick than the four than than who is receiving the the um the the swap line.

[00:21:30]Furthermore, it's a pretty neat trick to have the ability to keep a foreigner from selling their US dollar assets, but stay ingrained to the US dollar system.

[00:21:43]So while I agree there is an aspect of bailout to it, the fact that the United States has the ability to do this, and no other country has the ability to do this anywhere near on the same level, >> Right.

[00:21:54]>> I would say that's a structural advantage I mean, of course, you can always spin something to be a negative, and I understand how it can be seen as a negative, but if you really understand the nuance, any country would love to have the ability to do this, or have the ability to do it effectively. But just, you know, and it's not to say that other swap lines don't exist. You You could have a euro swap line, or a lira swap line, or a yuan swap line, but the point is is you don't really need to have those in a crisis. In a crisis, what you need is dollars.

[00:22:29]Let me make one other point real quick before I forget, cuz cuz I think it it it it it it it it it it it it it it it it'll help it'll help solidify this point a little bit.

[00:22:37]When the Iranian let's just call it a war kicked off two or three months ago, um many people would have thought that would have pushed gold, which had already gone to 5,500 to 7,000, 8,000, 9,000. Instead, gold fell.

[00:22:53]The reason gold fell was because of the risk associated with the war.

[00:22:58]There was a credit squeeze, dollar funding became harder to get and so these countries started selling gold to get dollars.

[00:23:09]In the last three or four months Russia has sold gold, Turkey has sold gold, the Gulf states have sold gold and so the point is it's not that gold is not important, it's not that these other assets aren't important, it's not that they can't help you in a crisis but the reason they can help you in a crisis is because they can easily be sold to get the dollars that are needed to stop the crisis.

[00:23:35]>> Yeah, that makes sense.

[00:23:36]Um >> [clears throat] >> How about how about How do stable coins play into all of this because yeah, you know, that that was another I mean the swap lines the dollar milkshake theory, all of that seems like just kind of the perfect environment as stable coins become an even easier method to export the dollar.

[00:24:00]>> Yeah.

[00:24:01]So, the first thing I'm going to say about this is there I I I don't I cannot remember his last name but there's a guy named Max. I used to live in San Francisco and he used to live in San Francisco. His name is Max and he reached out to me one time because he had heard me talking about, you know, my my my theory and the importance of the eurodollar market and he said, you know, Tether is kind of like eurodollars. It's a way to spread the dollar throughout the rest of the world.

[00:24:27]And I kind of understood what he was talking about conceptually but I didn't think the United States government would embrace them because I thought they would see Tether as a competitor.

[00:24:41]>> Right.

[00:24:42]>> So, what I will say now in hindsight of Max, if you're out there listening, thank you very much because you were right, I was wrong.

[00:24:50]Um [snorts] and the fact is is as they became more popular and more prevalent I think the United States figured out as a way that they could What What I What I think is kind of interesting is in many ways crypto, digital assets, etc. kind of started as a way to get out from underneath the power of the state.

[00:25:10]>> Yeah.

[00:25:11]>> But I think what happened with stable coins is the United States saw the potential for it, saw how efficient it was, saw how powerful it was, and figured out a way to co-opt this private innovation for their state-sponsored preferences, right? And so, essentially, stable coins are a digital asset that are backed by US dollar assets.

[00:25:38]And the United States a year ago year and a half ago instituted the genius act, which basically said if you're going to run a US stable coin, it has to be backed by US assets, treasuries, right? And so, this And because there's so much demand for these stable coins, and I'll get to why that's important here in a second, that means more demand for treasuries.

[00:26:02]>> Yes.

[00:26:03]>> Now, some people have said this is a stealth bailout of the United States Treasury. Again, I think that's the wrong way to look at it, and it's not that it doesn't create demand for US treasuries, it does. But I think that's kind of a smoke screen for the real advantage.

[00:26:16]So, this is now a way that citizens in other countries, let's just use Turkey as an example, can hold a US dollar balance rather than holding a Turkish lira balance, and it's harder It's not impossible, but it's harder for the Turkish government to prevent them from doing that than it would be from them having a US dollar bank account in Turkey.

[00:26:42]>> Yeah.

[00:26:43]>> The reason that's important is because to to the extent citizens start to hold a foreign currency rather than your own currency local currency, that local currency begins to fall in value even faster than it already was.

[00:27:00]And the Turkish lira is currently at the lowest it's ever been versus the US dollar. I mean I know you're in Turkey right now. I'm sure if you walk down to the bazaar, you can buy anything you want if you have a US dollar in your pocket, right?

[00:27:13]>> For sure. I mean everywhere I go, you know, they're they would love to take dollars over lira and and and uh most businesses I've gone to um where you're spending some meaningful amount of money on every single checkout counter, there's a huge full-blown money counter right there, you know, and so like just goes to show you that they they count that you when you're paying cash, they're putting it through that thing and it's a stack of them cuz it I'm pretty sure the largest I'm pretty sure the largest bill they make here is a 200 lira, which is like five or six bucks, you know, so like you're carrying around stacks like this in your pocket.

[00:27:48]>> so and so and so so this makes it even easier for citizens, rather than converting their physical lira and going and finding somebody that will give them physical dollars, and rather than finding the handful of banks that will let you hold dollars in their banks. Not only that, but if you have your money in a bank and a crisis breaks out and you try to go get it, they might not give it to you.

[00:28:12]>> Right.

[00:28:12]>> In fact, this Turkish Central Bank might take those dollars for themselves. And that has happened before. That this is not some theoretical hypothetical situation. This is a real-world thing.

[00:28:21]So if a citizen in Turkey can hold a US dollar balance on their phone, that is a big advantage to them. And it's a disadvantage to the local government. And if the if that happens on a wide enough scale, you end up having what happened in in in Iran. The currency falls precipitously, everybody starts to you know, uh revolt or or or or, you know, act out and and any country that has gone through a currency crisis it it eventually becomes a government crisis.

[00:28:59]And in any case where a currency has failed, the government always fails as well.

[00:29:04]I mean, the the the currency and governments are inextricably linked.

[00:29:08]Unless you go to like a gold standard or a Bitcoin, you know, what whatever hard money standard there is, but that in itself causes a lot of pain for the governments as well. So, they don't really want to do that. But, this is a way So, these these stable coins is a way to, instead of de-dollarizing the world, to re-dollarize the world, at least on an unofficial basis. Now, I'm I'm not saying the Turkish government is going to adopt dollars or the Egyptian government is going to adopt dollars or South Africa is going to go adopt dollars, but the citizens >> Yes.

[00:29:40]>> the citizens are already doing it, >> Yes.

[00:29:43]>> whether the governments like them to or not. And that has That helps the United States government because not only are there domestic citizens still using dollars, but now citizens all over the world starts to use dollars. And it it it extends the runway in which the dollar can, quote unquote, survive, right? So, so this goes back to the why isn't the dollar dying? Well, it's not dying because there is so much demand for dollars outside the United States.

[00:30:15]There's actually more demand for dollars outside the United States than there is in inside the United States, which sounds crazy, but that that's that's a result of this eurodollar system.

[00:30:23]>> Yeah.

[00:30:24]>> And so, it's it's just it's just really it's and it's not that it's impossible to change and it's not that it's it's not that someday it can't be different, but transitioning from the current system to some new system, no matter how well thought out is going to involve an incredible amount of pain.

[00:30:43]And nobody wants to deal with pain.

[00:30:46]Everybody wants to kick it down the road, especially politicians.

[00:30:50]And so I I I that's that's the you know, both stable coins, the amount of debt in the world, and um swap lines are a big reason why I don't think the dollar is dying anytime soon.

[00:31:03]>> So, I want to bring this whole idea kind of like how how should the audience or how are you how does one kind of prepare or what do we do what do we look at as far as if we want to take advantage from kind of information that we're getting here? And I mean, I guess before we even go there maybe the transition you can make into that kind of idea is is your thesis here that swap lines somehow have something to do with that?

[00:31:36]Cuz we had swap swap lines aren't new, right? They've been around for a while.

[00:31:39]So, why is it that you're talking about them a lot lately? Are they increasing?

[00:31:43]What's happening? And then how does that affect the markets? And what should we be looking for?

[00:31:48]>> So, the the the answer sort of depends on where you're at. Like if you're a Turkish citizen, your options are a little different than if you live in Texas, right? Or if you live in Thailand, or if you live in South Africa, or or Venezuela. So, it it and I'll kind of address all of these.

[00:32:02]But the reason I'm talking about them now and part of the reason that I think it's important to really understand how the system is designed and how it can be weaponized if they choose to do so by the United States.

[00:32:16]The reason it's more important now than ever is for most of my career let's say up until the last 5 years for the most part, the world was moving in a globalized way. They were it was becoming more globalized. It was becoming more cooperative. You could basically travel if you had a little bit of money, you could basically travel anywhere in the world. You could pretty much go do anything you wanted to do.

[00:32:40]And there was the business community got more and more efficient because there was this one supply chain that everybody's everybody shared.

[00:32:49]But, you know, whether you you could say it started off in 2008 or you could say if 2014, you could say 2022 with Russia, you could say COVID. There's many places along the way you could say it started, but I just use COVID cuz it was easy.

[00:33:05]But the world stopped cooperating with each other and they have no longer as acting on as friendly terms with each other as they were for most of my career.

[00:33:15]And in fact, they're not only not cooperating, but they are dealing with each other in a much more uh I don't want to say angry, that's not necessarily the way, but a but a a more nationalistic footing, right?

[00:33:30]And that means that there the the idea that we could have these liquidity crisis or these credit crunches that I spoke about earlier, I believe this new environment that we're we're moving into, one where we're having deglobalization rather than globalization, where there were having confrontation rather than cooperation, it increases the likelihood that we're going to have those credit crunches that lead to liquidity crisis.

[00:34:00]And so that then has effects on markets and asset prices.

[00:34:05]>> Mhm.

[00:34:06]>> Now, the interesting thing about the whole dollar milkshake theory is everybody always focuses on the dollar as if I'm saying you should just go hold on to the dollar and nothing else. So that has never been the case. It's just important to understand why it's not dying and why the risk is that it goes higher, not lower.

[00:34:23]>> If the dollar index goes lower to a certain extent, if Trump gets what he want cuz I agree Trump probably wants a weaker dollar. He doesn't want the dollar to crash, but he probably maybe he wants a weaker dollar. So, in that case, you know, you need to be invested. You can't just be sitting on the sideline. In that case, you know, equity should do well, real estate should do okay, gold, Bitcoin, digital assets. You know, if the dollar kind of stays at this level or goes lower, that's probably okay for investments, right? So, you need to have some money in the game. You can't just be sitting 100% on the sideline.

[00:34:55]But, you also cannot just expect that assets are going to go up into the right without any risk happening and without these severe drawdowns. I think we're going to have more severe drawdowns and more credit crises over the next 5 years than we've had over the last five, right? And I think there's the potential that they're severe. Now, that's I'm not predicting doom and gloom. I'm not saying we're on the cusp of Armageddon.

[00:35:21]I'm saying it's a possibility and because of the design of the system, you need to be prepared for it. So, I think you also need to be And in And in the same way that you're prepared for the dollar to go lower because that's what Trump wants, you need to be prepared for the dollar to go higher because that might happen whether he wants it or not.

[00:35:40]And if that happens, it's going to affect your portfolio. So, I think you need to have some cash on the sideline.

[00:35:46]Now, if you don't live in the United States, holding some US dollar cash is probably a good thing because your current your your foreign currency is probably losing value more quickly than the dollar is anyway, right? Yeah. So, if you live in Turkey and you save in dollars, this whole downturn in their economy hasn't hurt someone who's holding dollars as much as someone who's holding local currency.

[00:36:08]But in addition to that, you know, have some precious metals, maybe you have some of your digital assets, have some real things. So, if fiat currency loses value, you have something, but you need to have some kind of protection against the dollar going higher and those asset prices falling.

[00:36:25]So, maybe you have And that's why I say, you know, having some cash on the sidelines so you can take advantage of those downturn in prices. Having some cash on the sidelines so you don't have to sell your assets when you don't want to.

[00:36:38]>> Right.

[00:36:39]>> have the ability if you if you have the ability to to hedge your investments in some form, you know, if you have the ability to buy some put options on equities or you have the ability to maybe you de-risk your portfolio a little bit and you don't take quite as much risk as you're currently taking.

[00:36:56]Um that might be something that you think about. But I think you need to be ready um for these periodic drawdowns. And here's the thing, when I when when I first started talking about this framework back in 2018, I said in the future I thought bonds would fall, US equities would rise, gold would rise, and the dollar would rise.

[00:37:16]And I said, "Along the way, it won't be smooth.

[00:37:19]There will be terrifying drawdowns along the way."

[00:37:22]And if you look back, that's kind of what happened. We had a terrifying drawdown in Well, we had a a drawdown in um late 2018. We had a drawdown in 2020, which was COVID. We had another drawdown in 2022 was when they started raising interest rates. We had a drawdown last April with the tariffs, and we had another drawdown this year with Iran.

[00:37:43]So, but if you zoom out, everything's gone up, right? But it but it hasn't been a smooth ride. So, I kind of think like the next four or five years will be kind of similar. I don't think you should just be sitting in cash because I think asset prices probably go higher, but I think there's going to be terrifying drawdowns along the way. And like you know, again, I'm I'm I I am a financial advisor, but I'm not the financial advisor for the people listening here, so I can't really tell them exactly what to do cuz I'm not familiar with their personal situation, but I think they should be prepared in some way or another for these drawdowns.

[00:38:16]>> What do you think about kind of It's hard to know for sure because we we kind of we're kind of uh only guessing what Kevin Warsh is going to do based on kind of what he's been talking about recently, his prior stance when he was at the Fed, but I think that's irrelevant now because he's seen so much and times have changed.

[00:38:37]I just made a show on this kind of like his barbell strategy where, you know, he wants essentially lower rates. He believes AI will be disinflationary, so lower so he can justify lower rates.

[00:38:49]Um but at the same time, you know, reducing the the federal balance sheet, essentially reentering or re- uh like restarting quantitative tightening in a way. I don't know if they'll call it that, but that's essentially what he wants to do.

[00:39:05]>> [clears throat] >> What what levers Is that is that the levers that the major levers that are pulled at the Fed for the dollar getting weaker or stronger mostly and it's like so what what do you think about Warsh's policy and and what what are you expecting to happen?

[00:39:19]>> So this is really interesting for a number of reasons.

[00:39:22]Um and I'm going to I'm going to answer this from several different angles. So I'll try to make it simplified to make sense, but >> Thank you.

[00:39:28]>> historically, the United States Treasury has been in charge of dollar policy and the Fed has been in charge of domestic monetary policy. Now sometimes those are related and sometimes they're not.

[00:39:45]But what I would say is as we are moving into a world that is no longer co- operating to the same extent and we're moving into a world that used to be the rules-based order. That was the Western allies kind of cooperating together to run the world in a specific manner which they set out after World War II. That was called the rules-based order.

[00:40:05]We're kind of transitioning from that to the America first philosophy.

[00:40:10]It's a much different way that the United States deals with the rest of the world.

[00:40:14]Now under both of those, they both wanted the United States to kind of remain the global hegemon and be on top, but it's just a different strategy of getting to that, right?

[00:40:25]And in that rules-based order strategy, that was kind of a greater good strategy. We're doing this for the for the benefit of the overall world, the Western civilization, etc., etc., etc. Even though the United States was benefiting the most, it was kind of a global good um situation.

[00:40:41]That kind of coincided with Keynesian economic the rise of Keynesian economics because that's a greater good way of you know, understanding economics.

[00:40:53]Moving now to America first changes that a little bit. And I that's why I think it changes swap lines a little bit, right? I don't think swap lines are going to be used for the greater good. I think they're going to be used for the good of the United States. In some cases, that means you will get a swap line, in some cases, you won't.

[00:41:10]So, I think as we move into that US first America first strategy, in many ways, Trump outsourced the decision to Kevin Warsh of who to get at the Fed Treasury and and and Bessent really wanted Kevin Warsh. So, I have to believe that Warsh that Warsh and Bessent had a number of conversations about how we are going to work together. You know, for a long time, it was, you know, the the the the the Fed independence.

[00:41:40]And I've always said they've never been independent. They have autonomy, but they're not really independent. The United States government can take that independence away from them if if it ever comes to that. And so, I think we are going to see a a Fed and Treasury that work closer together. And listen, if I'm wrong on this, I'll hold up my hand and say I got this wrong, but I think we'll see them work closer together.

[00:42:03]I think we will see certain things done Let me think. I think in the past, along with swap lines and government funding opportunities and trade treaties. In many ways, when the United States did something for the United States, they also tried to do it for the rest of the world. I don't think that will be the case going forward. And so this is where this is where swap lines but this is where stable coins come back into to importance as well.

[00:42:32]Traditionally, a US dollar outside the United States traded on par with a dollar inside the United States.

[00:42:41]So and that's why these claims in the eurodollar market would eventually find their way back into the United States.

[00:42:47]That was one of the reasons you would it put a swap line in place was because, you know, the offshore market needed onshore dollars.

[00:42:56]With the rise of stable coins, it's possible we get into a thing where we have offshore US dollars and onshore US dollars trading at different prices.

[00:43:08]So you have USDT and and you know, Circle as well, but then you could have foreign issued US dollar stable coins that maybe and that the United States doesn't regulate that maybe they're not backed by US dollar assets or maybe they're only partially backed and maybe as a result and because maybe they're not endorsed by the United States, maybe they traded a discount.

[00:43:30]And then maybe there's a way that the Fed and the Treasury could channel dollars to US dollar >> [laughter] >> uh stable coin holders but not give them to the offshore market. Right? Uh and they would no longer trade at par.

[00:43:49]And that's not I don't think that that's available today, but I think that is something that they're working for. I think they're working towards a way they no longer have that they can continue to use the dollar as a weapon if and when it's needed, but not be beholden to the eurodollar sellers if and when they need liquidity.

[00:44:08]I'm not exactly sure how they'll pull that off and maybe they won't pull it off, but I think that that's one thing that they're thinking about.

[00:44:15]>> That makes sense.

[00:44:16]Um Okay, so but I I I do this thing at the end of my interviews just they're just kind of fun.

[00:44:24]Um just rapid fire. So I'm just going to ask you a question, boom, quick, 30 seconds, whatever comes to your mind. Uh Bitcoin in 12 months, uh over or under $150,000?

[00:44:35]>> Under.

[00:44:36]>> Okay.

[00:44:37]Uh gold in 12 months, over or under $6,000?

[00:44:41]>> Under.

[00:44:43]>> Okay. Does Bitcoin behave like gold in the next crisis, yes or no?

[00:44:49]>> No.

[00:44:51]>> Europe ask for a swap line in 2026, does Trump give them one?

[00:44:57]>> With severe strings attached.

[00:44:59]>> Okay.

[00:45:00]If you had to pick one for the next 10 years and sell the other today, gold or Bitcoin?

[00:45:07]>> I would take gold.

[00:45:08]>> Okay. DXY at the end of 2026, over or under 100?

[00:45:14]>> Ooh, that's a tough one.

[00:45:15]>> Yeah.

[00:45:16]>> I I think it's probably going to be right around 100.

[00:45:20]>> Which is it's currently right around there right now, right?

[00:45:22]>> Yeah, it's like 99. I'll I'll I'll say I'll say I'll I'll I'll take the under just, you know, cuz I think it's going to be kind of right at right around these levels.

[00:45:29]>> All right. And I don't know that there is an answer to this, but how many years left for the dollar dominance?

[00:45:38]>> I I think many. A couple decades, probably. Yeah.

[00:45:41]>> Okay. Cool. Brent, uh thank you so much for coming on. It was It was a pleasure.

[00:45:45]I learned a lot. And for those who want to follow your work, what you do, where can they find you?

[00:45:51]>> So the best place to find our work is if you go to Well, first of all, we have a website santiago capital.com. If you go to research.santiagocapital.com, um you'll see the different offerings we have that you can participate uh from our written work.

[00:46:06]Um, I also do a show every weekend called Milkshakes, Markets, and Madness on YouTube. And then I'm very active on Twitter. Um, my Twitter handle is Santiago AU Fund and it's the picture of a white seashell. So, anyway, if you want to interact with us on any of those platforms, we'd love to have you.

[00:46:25]>> Awesome, Brent. Thanks again for coming, man. Really, really appreciate your time.

[00:46:29]>> Thank you. Good luck.