The Santiago Capital chief and author of the Dollar Milkshake Theory said the Fed’s first hike in more than three years is not a victory lap. It is Kevin Warsh buying credibility he expects to spend later. “The new Federal Reserve chairman is trying as much as possible to gain some credibility early on because he knows he will lose some later.” The bigger call is institutional. Johnson believes the United States will pull the Fed and the Treasury into one fighting unit whether the Fed likes it or not. “I believe that unifying the Federal Reserve and the Treasury Department is a tool that would help the United States in this endeavor.”
He does not expect a press release that says we merged. “I don’t expect them to simply announce: We are merging. I think we will reach a stage where they are coordinators. The Federal Reserve will begin to lose its ability to object.”
If it becomes a fight, he picks a winner. “I don’t think he has the ability to win a long term battle with the Treasury Department. My assessment is that if it comes to that, the Treasury Department will win.”
A strong dollar is the weapon, not the wound that kills America first. Higher rates hurt the United States. They hurt everyone else more. That is the milkshake in one sentence. “Yes, it harms her. But does it harm the rest of the world more? I believe it harms the rest of the world more.”De dollarization talk, in his frame, can still send the dollar up as the world scrambles for the cleanest dirty shirt. “Anyone who wants to confront Scott Bessent, the ultimate decision maker at the U.S. Treasury Department, should think very carefully. He is not a naive man, and he holds the reins of power in the world. Do you really want to be on the other side if they decide to use the dollar specifically against you?”
The endgame is not a tidy win. Force the dollar to stay king and you can still lose control of prices. Gold does not need the dollar to die. “The price of gold could reach $10,000, and the dollar would remain the dominant global currency. I believe this possibility is closer to reality than the opposite.”That is insurance, not a bet that the greenback vanishes. If the dollar ever does break, Johnson has long said it breaks from strength, a squeeze that blows up the rest of the system first.
Makori walked him through yields, the independence myth, hegemony, America First liquidity, and the 2022 stress test.The plot does not change. Coordinate the printing press and the debt office. Arm the dollar. Watch gold reprice the damage even while King Dollar still clears the world’s invoices.
Wedding bells between the Fed and Treasury, in this interview, are not romance. They are the superpower playbook.
