You’ve probably heard some version of it: the dollar is dying. The government keeps printing money, the national debt keeps climbing, and a dollar today buys a fraction of what it did for your grandparents. So the conclusion seems obvious — the dollar is on its way out.
Brent Johnson thinks that conclusion is exactly backwards.
Johnson is the CEO of Santiago Capital and the creator of the Dollar Milkshake Theory, a framework he introduced back in 2018 to explain something that puzzles a lot of people: why does the US dollar tend to get stronger during global crises, even when the United States is running enormous deficits? He joined Branden DuCharme on the Tall Oaks Podcast for a conversation that works as a genuine primer on how the dollar actually functions — and why so much of the popular narrative gets it wrong.
Here’s the core of what they covered.
First, two very different meanings of “the dollar is crashing”
When people say the dollar is losing value, they’re usually pointing at the grocery store. Their dollar buys fewer eggs than it used to. Over 150 years, the greenback has lost most of its purchasing power. That’s real, and Johnson doesn’t dispute it.
But he draws a sharp line between that and a separate claim — that the dollar is about to lose its status as the world’s reserve currency and get rejected by the rest of the world. Those are two completely different things, and conflating them is where people go wrong.
On the purchasing-power point, Johnson makes an argument that reframes the whole issue: a currency slowly losing value isn’t a flaw in the system. It’s the design. If governments wanted money to hold its value forever, they’d back it with gold or some other hard asset and stop expanding the money supply. They don’t want that. So the gradual erosion of the dollar’s purchasing power, in his words, isn’t a bug — it’s a feature of how fiat currency is built to work. The practical takeaway he draws from this: sitting in cash means slowly bleeding value, which is why he argues for owning real assets and stocks rather than parking everything in currency.
Why the “dollar collapse” story misses the point
The reserve-status question is where Johnson really pushes back. His argument is that the dollar’s strength is a relative game, not an absolute one.
Yes, the United States has enormous problems — he’s the first to say you could spend an entire show listing them. But every other major country has the same problems, and most of them don’t have the advantages the US has. When you’re forced to choose between fiat currencies, “least bad” wins. If your dollar loses 5% to inflation this year and another country’s currency loses 15%, you’re 10% better off holding dollars. On a relative basis, Johnson expects the dollar to dramatically outperform its fiat peers.
The part almost nobody knows about: the eurodollar market
This is the section of the conversation most likely to make you rethink things.
There isn’t one market for the dollar — there are two. There’s the market inside the United States, and there’s a much larger market outside it, known as the eurodollar market. (The name is misleading — it has nothing to do with euros. It just refers to dollars and dollar-denominated credit that exist outside US borders.)
Here’s why it matters. Everyone worries about the roughly $40 trillion the US government owes. Fair enough. But what rarely gets mentioned is that the rest of the world owes more than that in dollars — and they owe it largely to each other, not to the United States. When you owe a debt in dollars, you need dollars to pay it. That creates constant, structural demand for dollars that has nothing to do with whether anyone “likes” the dollar.
Johnson’s example makes it concrete. Picture a Turkish shoemaker who borrows from a lender in France, with the loan denominated in dollars. When that payment comes due, the shoemaker has to go find dollars to make it. Multiply that across the entire globe — Japan buying soybeans from Brazil, France buying copper from South Africa, all settled in dollars — and you start to see the scale. As Johnson puts it, the dollar is like water to a fish: most people never think about it, but that doesn’t make it any less essential. And when that global dollar liquidity starts to dry up, that’s precisely what triggers financial crises, from the Asian currency crisis to 2008 to Covid.
So can the BRICS nations actually replace it?
You’ve probably seen the headlines: the BRICS countries are building their own currency, and the dollar’s days are numbered.
Johnson’s take is measured. Plenty of countries genuinely want out of what he calls the “eurodollar trap” — they don’t like being beholden to the dollar, and they’re actively working on alternatives. But wanting out and getting out are very different things. Unseating the dollar is like trying to unseat a dominant network — think of how hard it would be to replace a platform everyone already uses. It’s not impossible, but it’s enormously painful.
And there’s a catch that makes it harder still. If a chunk of the world did migrate to a new currency, all that existing dollar-denominated debt doesn’t disappear — it still has to be serviced. You’d end up with the same mountain of dollar liabilities but less dollar liquidity to pay them, which tends to push the dollar up, not down, creating exactly the kind of crisis that punishes anyone trying to leave. Pulling off a coordinated global switch would require every country to agree to move at the same time on the same terms — and, as Johnson notes, anyone who’s ever tried to get four people to agree on where to eat lunch knows how that goes.
The band: why the dollar can’t get too strong or too weak
One of the more useful mental models from the episode is what Johnson calls “the band.” He borrows an analogy from the TV show Landman, where a character explains that oil needs to stay within a certain price range — high enough that producers make money, low enough that consumers aren’t tapped out.
The dollar works the same way. Within its band, the system hums along: a moderately strong dollar lets other countries sell goods into the US cheaply and keeps everything working. But push too far to either edge and problems start. Too strong, and you get the debt crises he describes, as countries struggle to service their dollar obligations. Too weak, and foreign goods get more expensive, Americans buy less, and those exporting countries can’t meet their debts either.
What this means for your portfolio
The back half of the conversation gets practical, and this is where it connects most directly to how people actually invest.
Johnson makes a pointed argument about international diversification. The textbook wisdom says every portfolio should hold some international equities because they’re less correlated with US stocks — they smooth out the ride. His pushback: that diversification tends to vanish exactly when you need it most. In a genuine crisis, a US debt crisis becomes a global debt crisis, and everything sells off together. Or, as the old saying goes, when Wall Street sneezes, the rest of the world catches a cold. (Notably, he points out this doesn’t run in reverse — a Turkish or French debt crisis doesn’t have to drag down the US.)
He also notes something many investors overlook: if you own large US blue-chip companies, you already have substantial international exposure baked in, since a big share of S&P 500 earnings comes from overseas business. You don’t necessarily need to go buy foreign equities to get it.
But the line that best captures his philosophy is about who he actually serves. Most of his clients, he says, didn’t come to him to get rich — they’d already done that on their own. They came to him to stay that way. For someone approaching or in retirement, a portfolio jumping 25% in a good year doesn’t change their life much. A 25% drop, on the other hand, could change it a great deal. So he gears portfolios toward protecting lifestyle, earning a fair return, and outpacing inflation — rather than swinging for the fences to beat the S&P 500.
He closes with a rule of thumb from investor Paul Tudor Jones: if people spent even a tenth as much time thinking about how not to lose money as they do on how to make it, they’d be far better investors. Because of how compounding works, a loss takes more than the same percentage gain to recover from — lose 10% and you need more than 10% just to get back to even. Protecting the downside first, in Johnson’s view, is the whole game.
The bottom line
The Dollar Milkshake Theory isn’t a prediction that everything will be fine. Johnson is clear that he expects the years ahead to be volatile — maybe severely so. His point is subtler: the dollar’s dominance is more durable, and more structurally embedded in the global system, than the “dollar is dying” headlines suggest. Understanding why is the difference between reacting to those headlines and building a portfolio that can withstand what actually comes.