We Study Billionaires - The Investor’s Podcast Network TIP397: The Dollar Milkshake Theory Update w/ Brent Johnson
Nov 19, 2021
Brent Johnson, Founder of Santiago Capital, is known for his provocative Dollar Milkshake Theory, which posits that the dollar could strengthen during a currency crisis. He discusses how this theory has evolved since COVID-19, the significance of supply shocks on the dollar, and provides a watch range for the DXY. The conversation also dives into the performance of Bitcoin and other assets amid changing monetary policies, and the implications of potential financial resets and geopolitical dynamics on investments.
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Dollar Milkshake Theory Overview
- The Dollar Milkshake Theory explains how a sovereign debt crisis unfolds, predicting a stronger dollar.
- This contrasts with the popular narrative of a weakening dollar during a currency crisis.
Fed's Limited Power
- The Fed's ability to combat a rising dollar is limited by current inflationary pressures.
- Artificially weakening the dollar would exacerbate inflation.
Portfolio Allocation Strategy
- Diversify your portfolio and allocate a small percentage to asymmetric trades that would benefit from a rising dollar.
- This acts as insurance against potential market downturns.