Bankless Podcast Summary

Episode: How the Stablecoin Milkshake will Redollarize the World
Guest: Brent Johnson (Santiago Capital, Dollar Milkshake Theory)
Date: January 5, 2026

Episode Overview

This episode features Brent Johnson, founder of Santiago Capital and creator of the "Dollar Milkshake Theory." The discussion explores the resilience of the US dollar as the world’s reserve currency, the global push for de-dollarization versus the reality of "redollarization," and the strategic role of stablecoins (especially post-GENIUS Act) in extending US monetary influence, particularly into developing economies. The episode dives deep into the interplay of geopolitics, monetary systems, and the accelerating impact of crypto-native financial technologies.

Key Discussion Points & Insights

1. The Desire vs. Reality of De-Dollarization

• Brent Johnson notes a widespread desire among global actors to dethrone the dollar due to its "exorbitant privilege"—the US ability to print the global reserve currency and influence others’ economic outcomes ([00:00], [14:51]).
• However, the ability to achieve de-dollarization is limited:

  “But the ability to actually do it is dramatically different than the desire to do it.” — Brent Johnson ([00:55], [14:51])

• The dollar’s network (especially the eurodollar system) remains the most robust in history, making transitions away from the USD extremely challenging for most countries, except perhaps major players like China or Russia ([15:50]).

2. The Dollar Milkshake Theory Recap & Evolution

• Johnson’s theory predicted that rising US interest rates would squeeze global dollar debtors, push the dollar higher, and lead to US asset outperformance, with global volatility and a potential crisis ([01:48]).
• While directionally correct, the expected sovereign debt crisis hasn’t occurred yet: strong central bank intervention has kept the “can kicking” tradition alive ([03:31]).

  “We like to think of them as a bunch of clowns and idiots... Yet here we are.” — Brent Johnson ([03:31])

• The system’s design (debt-based money) guarantees eventual crisis, though the timing is unpredictable ([06:34], [11:14]):

  “This is mathematical certainty. The reason is because of the design of our monetary system... there’s never ever enough money to pay off all the loans plus the interest.” — Brent Johnson ([06:34])

3. Crisis Scenarios: Gradual Deflation vs. Sudden Shock

• There’s hope that gradual “letting the air out of the tire” could defuse a global debt blowup, but Johnson argues that history and system dynamics make a slow unwind unlikely ([09:23]).
• Only sustained, unusually high growth (3-5%+ annually) could prolong expansion—perhaps possible through technological leaps (like AI), but ultimately the system demands infinite growth, which is unsustainable long-term ([10:52], [11:14]).

4. Dollar Performance & Global Narratives

• On the narrative of USD decline (especially given the 10% drop in early 2025): Johnson points out that, long term, the dollar is still up since the Dollar Milkshake thesis emerged in 2018 ([28:38]).
• Crises—geopolitical or financial—continue to drive demand for USD over all other fiat currencies, even as the dollar steadily loses purchasing power relative to goods ([31:50]):

  “There’s dollars versus other fiat currencies... and then there’s dollars versus a basket of goods… two separate conversations here.” — Ryan ([30:55])

5. Recent Shifts: Store of Value vs. Medium of Exchange

• While the dollar remains dominant as a medium of exchange and unit of account, the store of value function is seeing competition from assets like gold (and potentially Bitcoin), particularly as central banks (e.g., BRICS) move away from US Treasuries after sanctions (e.g., Russia 2022) ([23:10], [25:17]):

  “I don't think we will see a situation where the rest of the world decides to buy gold and euros and yen and yuan versus the dollar.” — Brent Johnson ([25:17])

6. Stablecoins and the GENIUS Act: The New Redollarization Engine

• The US embraced stablecoins with the 2025 GENIUS Act, flipping regulatory skepticism into strategic adoption ([38:20], [38:49]).
• Johnson calls the act “genius” and sees it as a powerful tool to digitally redollarize economies—especially in unstable or inflation-prone regions ([39:10], [43:55]):

  “It's really a way for the United States to extend the dollar network throughout the world on a much faster, cleaner, more efficient basis… a great stealth weapon.” — Brent Johnson ([39:29])

• The stablecoin model allows the US to project influence (even regime change) by digitally supplying stable dollar-based money in adversarial or failing countries:

  “The US could also airdrop US dollar stablecoins to anybody that has a digital wallet in Venezuela and dollarize the economy very quickly... it's a great stealth weapon.” — Brent Johnson ([41:35])

7. Scale & Geopolitics of Stablecoins

• Current stablecoin markets are small (~$300B) compared to the eurodollar system (est. $13T), but rapid growth to several trillion dollars is feasible ([43:28], [43:55]).
• Private stablecoins may soon rival or replace traditional Eurodollars as the trusted international dollar standard, and are positioned to spread into developing economies at unprecedented speed ([46:16], [47:55]):

  “They could dollarize the Venezuelan economy within a few days, if not a few weeks.” — Brent Johnson ([47:55])

8. Geopolitical Reactions: The Dollar/Stablecoin Stack vs. the Digital Yuan Stack

• China is actively resisting stablecoin proliferation, building a rival digital currency stack (e-CNY, strong capital controls, gold backing) in a “global divorce” with the US ([51:06], [52:19]):

  “We are going through a global divorce between China and the US. Both sides want the divorce... post-divorce systems are being built now.” — Brent Johnson ([52:19])

• Johnson predicts coexisting but separate currency systems—dollar/stablecoins versus China’s digital/sovereign stack ([52:19]).

9. Investor Takeaways: Positioning for Redollarization

• US markets (equities, bonds, real estate) remain the best among global assets.
• Maintaining exposure to hard assets (gold, and perhaps Bitcoin) is prudent as a hedge against fiat debasement, but the US dollar is still preferred for cash or defensive allocations ([53:35], [55:19]).

  “The best of the worst fiats.” — David Hoffman ([55:21])

Notable Quotes & Memorable Moments

• On global anti-dollar sentiment and reality:

  “The desire to get out from underneath the thumb of the dollar is strong. But the ability to do so is dramatically different from the desire.”
  — Brent Johnson ([14:51])

• On central bankers:

  “We like to think of them as a bunch of clowns… Yet here we are.”
  — Brent Johnson ([03:31])

• On monetary systems and inevitability of crisis:

  “It’s mathematical certainty that we will have a crisis. The reason is because... loans have interest attached... there’s never enough money to pay off all the loans plus the interest.”
  — Brent Johnson ([06:34])

• On stablecoins as a weapon:

  “It is a great stealth weapon… you can get into a situation where the world voluntarily adopts the US Dollar stablecoin as the preferred medium of exchange.”
  — Brent Johnson ([39:29])

• On rapid digital dollarization of fragile states:

  “They could dollarize the Venezuelan economy within a few days, if not a few weeks.”
  — Brent Johnson ([47:55])

• On the GENIUS Act and adoption strategy:

  “The technology is pretty clever… the US passed the Genius Act which basically is authorizing stablecoins. … They are now going to use it to further their own power.”
  — Brent Johnson ([39:10])

• On China vs. US currency systems:

  “I think it's highly unlikely that the United States will use China's system and... China will use the United States system. ... You're going to have two systems.”
  — Brent Johnson ([52:19])

• On investment positioning:

  “The best of the worst fiats.”
  — David Hoffman ([55:21])

Timestamps for Key Segments

• [00:00–01:03] – On De-dollarization Desire vs. Reality
• [01:27–03:29] – The Dollar Milkshake Theory Recap
• [03:29–06:34] – On Central Bank Power & Crisis Kicking
• [09:23–11:14] – Gradual Unwind vs. Systemic Debt Constraints
• [12:54–14:51] – 2025 Setup: Narratives of De-dollarization
• [17:43–23:10] – BRICS, Private Market Choices, and Practical Barriers to De-dollarization
• [25:17–28:38] – Store of Value Fraying & Response to Dollar Bears
• [31:50–33:44] – Dollar vs. Goods vs. Other Fiat—Two Separate Conversations
• [34:31–38:20] – Crisis Events: Why Gold, Not Dollars, Sometimes Wins
• [38:20–43:55] – Stablecoins, the GENIUS Act, and Digital Redollarization
• [46:16–50:01] – Stablecoins’ Impact on Developing Economies and Political Sovereignty
• [51:06–52:19] – The Coming Dollar Stack vs. Yuan Stack Geopolitical War
• [53:35–55:21] – Investment Takeaways: Where to Find “Safer” Havens

Summary Table – Key Themes

| Theme | Speaker(s) | Highlight / Quote | Timestamp | |----------------------|---------------------|--------------------------------------------------------------|-------------| | De-dollarization | Johnson | "Ability is dramatically different than desire." | [00:55] | | Dollar Milkshake | Johnson | "US Dollar would go higher... US Assets would outperform..." | [01:48] | | Systemic Crisis | Johnson | "Mathematical certainty... have a crisis" | [06:34] | | Stablecoins’ Impact | Johnson | "A great stealth weapon... digitally extend the dollar" | [39:29] | | Redollarization | Johnson, Hosts | "GENIUS Act is scary how smart it is." | [39:10] | | China vs USA | Johnson | "Going to have two systems." | [52:19] | | Investor Advice | Johnson | "Continue to favor the United States and its markets..." | [53:35] | | Best of Worst Fiats | Hoffman, Johnson | "The best of the worst fiats." | [55:21] |

Conclusion

Brent Johnson’s updated Dollar Milkshake Theory, especially in the context of stablecoins and the GENIUS Act, suggests that not only is the USD’s dominance unlikely to be seriously challenged in the near term—it’s set to be digitally entrenched at an even deeper, more granular level globally. As stablecoins become regulatory-sanctioned tools of US foreign policy and monetary outreach, the era of “redollarization” via public-private technology rails is upon us. For investors, the US remains relatively attractive, though caution and asset diversification (including hard assets) remain prudent in an uncertain, rapidly evolving macro-financial landscape.