A US Sovereign Debt Crisis is Bullish for the Dollar | Brent Johnson

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Jul 27, 2025

Brent Johnson, CEO of Santiago Capital and creator of the dollar milkshake thesis, dives into the potential fallout of a U.S. sovereign debt crisis. He argues that such a crisis would not only be bullish for the dollar but also explores how fears of dollar weakness are exaggerated. The discussion touches on the precarious balance between the Fed and the Treasury, suggesting a shift that could lead to higher yields and dollar value. Johnson emphasizes the interlinked nature of global economies and the risks associated with international investing.

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INSIGHT

Dollar Surges in Crises

The U.S. dollar strengthens during global financial crises consistently over decades.
Its role as world's reserve currency creates demand, causing dollar appreciation in downturns.

INSIGHT

Global Dollar Debt Demand

The rest of the world owes vast dollar-denominated debt, creating global demand for U.S. dollars.
Dollar strength pressures borrowers worldwide, making debt servicing harder during downturns.

INSIGHT

US Debt Crisis is Global

A U.S. sovereign debt crisis would trigger global impacts, affecting many countries' bond markets and growth.
The U.S. debt crisis is thus a worldwide debt crisis, not an isolated event.

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Brent Johnson, CEO of Santiago Capital, joins Monetary Matters to discuss why he believes the idea that a US sovereign debt crisis could occur in a vacuum without spilling over into a global sovereign debt crisis is outlandish. He argues that because there would be knock on effects globally, any such crisis would be extremely bullish for the dollar, not bearish as many have argued. He also argues that current panic around dollar weakness is overblown and that the current battle between the Fed and the US Treasury will be won by the Treasury and usher in a new error of less autonomy and independence from the Federal Reserve, potentially sending yields and dollars higher.

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