Just because the Fed is cutting rates does not automatically mean the dollar will fall; it's a relative game where currency strength depends on comparative monetary policy across major economies and geopolitical safe-haven flows.

The dollar will not necessarily fall just because the Federal Reserve is cutting rates, because currency movements are relative and determined by comparative monetary policy across major central banks; the ECB is also cutting, China is doing massive stimulus, and Japan has been strengthened, so Fed rate cuts alone do not determine dollar direction.

A real-world example: in April 2024, speakers predicted fiat would die and hard assets would rise due to central bank printing, so many bought gold, silver, oil, copper. Over the next week, that bet looked good, but over the next 2-3 weeks those assets pulled back 5-20%, nothing had changed fundamentally, but investors who followed the advice were significantly underwater.

If you are participating in markets and want to profit from different asset classes, you must understand the relative levels of fiat versus fiat currencies, as this is probably the single most important variable in global finance—getting it wrong makes it hard to get the rest of your portfolio right.

COVID kicked the can down the road on debt problems because countries were cooperating globally and willing to coordinate policy responses, but this coordination is no longer happening as geopolitical confrontation increases, globalization retreats, supply chains separate into two blocs, and trade lines are drawn—making future debt problems harder to resolve through coordinated action.

The dollar milkshake theory is a framework for understanding how a sovereign debt and currency crisis will play out, not a prediction that everything will collapse in 6-12 months, but rather a multi-year or decade-long process where interest rates rise, bond prices fall, the dollar strengthens relative to other currencies, US equities outperform global markets, and gold rises—all driven by the mechanics of a debt-based monetary system and relative currency movements.

The rest of the world owes more US dollar-denominated debt than the US does, and unlike the US, most countries cannot print dollars to service that debt, which means when the dollar strengthens, it makes their debt burden heavier and creates deflationary crises in those economies while the US has relative advantage.

Markets are currently at extremes: stocks at or near all-time highs, gold at or near all-time highs, Bitcoin at or near all-time highs, silver at near 5-year highs, put/call ratios near historic lows (no one buying puts), credit spreads near historic lows, and VIX near all-time lows—these conditions are consistent with high risk of repricing if even a small unexpected event occurs.

The dollar milkshake thesis was never meant to imply the US dollar is a good currency or that the transition would be good for the United States; rather, it argues the dollar will be relatively better than other currencies, and the US will outperform globally, but the story ends very badly for everyone including the US.

Many people have 60-70% of their portfolio concentrated in gold or hard assets, which is a huge position that, while it may work out, is also very risky because of concentration risk regardless of how much conviction you have in the thesis.

Central banks and governments are extremely powerful and can do many things to prevent crises, but they are not infallible—just because they don't want a crisis to happen doesn't mean it won't happen, as demonstrated by the 2008 financial crisis occurring right before the election.

Johnson initially predicted the sovereign debt and currency crisis would occur within three to five years of 2018 (by ~2021-2023), but it did not materialize; he now predicts it could occur in the next three to five years from the interview date (2024), while acknowledging the same uncertainty and willingness to admit if wrong again.

The biggest mistake investors make is allocating their portfolio based on what they want to see happen in the world rather than what they objectively believe will actually happen, leading to poor outcomes when reality diverges from hopes

The transition from the current monetary system to a new one will not happen peacefully—it will likely be economically volatile and possibly militarily violent, as power systems and regimes typically do not willingly give up power and will use all available tools to protect their interests.

The current state of the economy is 'fine' from a high level—stocks at highs, unemployment low, volatility low, inflation coming down—but when you dig deeper things look less good; complacency and lack of fear in the market is precisely when one should step back and reduce risk via hedges, taking profits, or holding cash rather than deploying aggressively.

Brent does not expect a meltup into the end of 2024 before the election, but acknowledges it is not impossible to happen, and is currently positioned more conservatively than he has been in a long time

In a debt-based monetary system, money supply must grow to function, and as money supply grows, fiat currency loses purchasing power over time—this is inherent to fiat systems and not unique to the US, but occurs everywhere fiat currency is used.

You can move from inflationary conditions to deflationary conditions very quickly (described as the difference between climbing stairs up and falling down an elevator shaft), and this speed of transition is partly due to the design of the monetary system itself.

The primary goal for Johnson and his clients, and what he thinks should be the goal for most people, is to 'survive and advance'—get on base, don't strike out, make progress—rather than hitting home runs every at-bat, because those who swing for the fences every time will eventually strike out badly while steady performers will accumulate over time.

You can buy a one- to two-percent out-of-the-money put on the S&P 500 with a 9-12 month expiration for approximately 2% of portfolio value, which provides downside protection at current pricing (though this is not a recommendation and carries its own risks).