Check out Brent&#x27;s paper on the dollar https://research.santiagocapital.com

The Dollar Reset Just Started…And It Could Break Everything w/Brent Johnson

Rebel Capitalist Interviews

# Full Transcript

**Podcast:** Rebel Capitalist Interviews

## Participants

- **George Gammon** (None)
- **Brent Johnson** (None)

## Transcript

Hello fellow Rebel Capitals, I'm back with my good buddy Brent Johnson. Why? Well, a lot of reasons, but number one, the DXY is up over 100, up over 101. Looks like it might be going over 102. What's going on with the dollar, buddy? Well, that's not supposed to be happening, is it, George? I thought it was going into the 80s and then the 70s. Somebody told me that.

I know, the dollar is going to crash. It's going to crash, Brent. It's just, it's right around the corner. It's been right around the corner for 40 years, but it's going to happen tomorrow. What we're seeing is just, how could I steel man the argument? I would say that what you're seeing as far as strength in the dollar versus other currencies is simply the dollar being oversold for so long and there's so many short sellers and maybe what we're seeing is a short squeeze.

Well, and I think a lot of people are saying that it's based on one press conference that Warsh gave and everybody now thinks he's going to raise rates and so it's getting a short term bid because the higher rates make the dollar more attractive. That doesn't make, okay, so that's a nothing burger and I'll tell you why. Because first of all, the two-year treasury is down like five or six basis points today.

And if you look at the CME, the odds in the last couple of days when the dollar has just gone straight up, the odds of a Fed rate hike have decreased. They haven't increased. Yeah, I'm just telling you what people tell me, why the dollar is only going to be up for a couple of days. I mean, I will say this, it is getting into overbought territory. It's probably due for a pause. A lot of the other currencies are very weak. Markets don't go in a straight line.

But the reality is that the whole world is short dollars by design. It's a dollar-based system. Dollars get loaned into existence. And so by definition, the world is short dollars. When you mean short, that could mean two different things. So explain that a little further. You mean they don't have enough dollars or they're betting that the dollar is going to go down in value? Or I guess are those things one and the same?

Well, they could be one and the same. But there could be a tactical short, which just means from a trading perspective, people are long the dollar or short the dollar. But from a systematic perspective, from a mechanical perspective, dollars get loaned into existence, either in the domestic U.S. dollar market or in the euro dollar market.

And so by definition, whoever borrowed those dollars is taking a short position against the dollar and a long position in whatever asset they are going and deploying it into. But all of that money, this is the thing that people have to get their heads around. Dollar supply is also dollar debt. It's also dollar demand, with the exception of the monetary base, be...

The Dollar Reset Just Started…And It Could Break Everything w/Brent Johnson

Transcript

Built for investment professionals

Every day you wait, your competitors are finding
edge in conversations you're not hearing.

The Dollar Reset Just Started…And It Could Break Everything w/Brent Johnson

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.