Brent Johnson: Expect a terrifying DRAWDOWN before YEAR-END when the DOLLAR rises

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Aug 21, 2025

Brent Johnson, CEO of Santiago Capital and creator of the Dollar Milkshake Theory, predicts a looming global financial crisis tied to a strengthening U.S. dollar. He delves into how U.S. policy can influence currency value and discusses the risks of a yen carry trade unwind. The conversation touches upon the implications of rising rates, Central Bank dynamics, and why most investors are unprepared. He also shares insights on gold, Bitcoin, and the evolving financial landscape, emphasizing the need for strategic portfolio adjustments.

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INSIGHT

Dollar Falls Only If U.S. Allows It

The U.S. can prevent a dollar decline if it chooses because global flows depend on U.S. policy decisions.
A falling dollar only happens when U.S. authorities allow it, not because the rest of the world forces it.

INSIGHT

Crisis Liquidity Fuels A Stronger Dollar

In crises, central banks inject liquidity and capital flows back into U.S. markets, strengthening the dollar and U.S. assets.
That mechanism explains why a global liquidity shock can make the dollar and gold both rise simultaneously.

INSIGHT

COVID Stimulus Deferred, Not Solved, Debt Problems

The 2020 coordinated global policy response to COVID delayed a sovereign debt crisis by adding dollar liquidity via debt-based stimulus.
That liquidity initially weakened the dollar but created large dollar-denominated credit that later became vulnerable when rates rose.

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Brent Johnson, CEO of Santiago Capital and creator of the Dollar Milkshake Theory, lays out why a stronger U.S. dollar could trigger a global financial crisis before the end of the year. He explains why the dollar can only fall if the U.S. allows it, how rising rates and geopolitical fragmentation are setting the stage for a major liquidity event, and why most investors are completely unprepared. We also cover: – The coming terrifying drawdown and how to position for it – Why Trump’s America First policies are breaking the rules-based order – How a yen + dollar carry trade unwind could freeze global capital flows – Why swap lines may not be available in the next crisis – The role of gold, Bitcoin, and stablecoins in the evolving system – Why central banks fear a return to a gold standard

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00:00 – Why the Dollar Can’t Fall Unless the U.S. Allows It 03:10 – What Is the Dollar Milkshake Theory? 06:17 – Why Critics Misunderstand the Milkshake Framework 8:45 – Why the 2022 Crisis Didn’t Materialize 14:40 – Trump, Trade Wars & the End of Cooperation 17:05 – Is 2025 Another 2018 or 2008 Setup? 20:15 – Everyone’s Bearish: Dollar Sentiment Breakdown 23:20 – The Dollar Danger Zone & Fed's Dilemma 26:50 – Why the Dollar Falls First in a Crisis 31:00 – Yen Carry Trade Unwind & Global Liquidity Risks 35:00 – Where Does the Crisis Start? 38:00 – Can the U.S. Survive the Drawdown? 40:10 – The Future of Swap Lines Under Trump 42:10 – The Fed–Treasury Merger Scenario 47:00 – Portfolio Strategy: Hedges, Cash & Tail Risk 51:00 – Bitcoin: Asset vs Currency Debate 54:00 – Stablecoins, XRP & Digital Dollar Strategy 58:00 – Gold’s Role: Store of Value or Money? 1:02:00 – Why Non-U.S. Buyers Are Driving Gold Higher 1:04:30 – Is Gold Money Today?