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#196 Brent Johnson, Creator of The Dollar Milkshake Theory, Explains How The Global Economy Is 'One Big Carry Trade'

The Julia La Roche Show

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Geopolitical Tensions and the Power of the US Dollar

Countries borrowing in US dollars experience significant pressure due to their lack of control over their own money supply, leading to a desire for de-dollarization. This desire stems from the need for governments to manage their economies independently, rather than being subject to the influences of US monetary policies. The entrenched Euro dollar market complicates this situation, as it limits countries' ability to escape this system. The US dollar serves as a powerful geopolitical tool for the United States, regarded as its most formidable weapon. The US can wield the dollar both defensively and offensively, adapting its approach based on its economic needs. A historical example includes the Federal Reserve's decision to raise interest rates in response to politically unacceptable inflation levels in 2022, which, while publicly justified to address domestic concerns, simultaneously exerted pressure on global economies. By reinforcing its economic strength, the US gains leverage in international negotiations, especially during times when other nations are struggling economically, further asserting its hegemony in global affairs.

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