The Reverse Dollar Milkshake Theory
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In a recent article, I explored how gold, silver, and bitcoin tend to behave during market crashes. Understanding crash dynamics is critical—not just for managing risk, but for identifying opportunities that might emerge when the financial system goes into meltdown. Yes, history doesn’t repeat exactly, but as the old saying goes, it often rhymes—and recognizing those patterns can help us position ourselves well before the average investor catches on.
That said, recent historical trends—and the tools built around them—always have their limitations. Take technical analysis, for example. It’s a tool many people, including myself, use to make better investment decisions. Looking at charts can help us find good entry points, support zones, and project where the price of an asset might eventually go. On the other hand, charts are unthinking and inherently backward-looking—making them far less useful when it comes to warning us that a major systemic shock is incoming.
Chart’s don’t have a special function to alert us to an overnight currency devaluation—a sudden geopolitical shock—a cyberattack—or an impending financial reset. This is where technical analysis breaks down entirely—because such events fall outside of normal market parameters. World shaking events typically arrive without warning—and when they do, they can render much of the conventional playbook obsolete.
That’s why I believe many purely technical analysts will be blindsided by what comes next. We are no longer living in a cyclical market bound by past norms—we are now in an era of rolling crisis: geopolitical, economic, and monetary. The familiar cycle is ending. What lies ahead is the breakdown of key pillars of the old system, as major powers—and the elites behind them—compete to shape the architecture of whatever replaces it.
In such an environment, having a really solid macro understanding of what is taking place will be essential for making sense of what comes next.
But let’s not single out the chartists. Macro thinkers are just as vulnerable to getting trapped in rigid frameworks and outdated assumptions. Even theories that once seemed reasonable in the old paradigm can quickly become liabilities as the reset unfolds. If you anchor yourself too deeply to one of these ideas of how things should unfold—without adjusting to how they are unfolding—you risk being blindsided.
It’s important to acknowledge nobody has a flawless map for what comes next, but that’s precisely why adaptability matters. More than that, it takes intellectual honesty. The real discipline for investors in my opinion lies in challenging your own convictions, discarding what no longer holds up, and constantly refining your perspective as new information comes to light.
A perfect case study of this is the Dollar Milkshake Theory, proposed by market strategist Brent Johnson around 2017. The theory is straightforward enough: in a world flooded with liquidity (the "milkshake"), the US dollar becomes the "straw" that siphons capital from the rest of the globe. As central banks around the world print money, global investors seek safety—and they often find it in the dollar and dollar-denominated assets, especially US treasuries. This creates a self-reinforcing cycle, driving the dollar ever higher, even in the face of America’s own monetary expansion.
