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The Terminally Ill Greenback: A Relatively Strong Dollar Is Still a Weak Dollar

November 27, 2023

Matterhorn Asset Management partner, Matthew Piepenburg discusses the future of the USD with Brent Johnson of Santiago Capital in this thoughtful “debate” hosted by Adam Taggart of Thoughtful Money.

As the author of the compelling “Milkshake Theory,” Brent Johnson is known for his logical argument that despite all of the USD’s extraordinary flaws, over-creation, and inflation-exporting “bully power,” its relative strength today and tomorrow is undeniable, and that a case for a stronger USD (DXY at 150?) is the most likely path forward.

Piepenburg and Johnson in fact agree on many of the primary forces (Euro Dollar demand, derivative market demand, SWIFT dominance etc.) in play which create a profound demand “tailwind” for the USD, and hence all but assure its relative strength over other fiat currencies. They further agree that gold will rise significantly in the coming years.

Where they disagree is the end-game for this world reserve super currency, which Piepenburg argues, will eventually grow too strong for even US policy makers, whose constant and increasingly addictive need to create more liquidity to monetize record-breaking debt levels, combat recession and improve its trade imbalance will necessitate a weaker USD in the end.

Johnson argues that if so much fake liquidity, which has already reached unprecedented levels, will eventually weaken the USD, then how can one explain the Dollar’s 25% rise from the days before QE even began some 15 years ago? Meanwhile Piepenburg asks where would interest rates be with a DXY at 140. Unfortunately, time prevented a full discussion of either question.

Piepenburg sees extreme and extraordinary QE (or YCC, more Swap lines, TGA “emptying”) and other synthetic “backdoor” liquidity measures (weakening the USD) as inevitable, short of a second Plaza Accord or an already IMF-telegraphed Bretton Woods 2.0 to further prevent a soaring USD.

Ultimately, Piepenburg argues that all debt-soaked regimes, without exception, debase their currency to save their “system,” while Johnson argues that the USD, with its unique world reserve currency status and extreme sources of external demand, will avoid a dramatic fall. In the end, however, both agree strongly that gold will be a key asset regardless of who wins the “DXY” debate.

Of course, 60+ minutes is never enough time to fully address all the salient questions and concerns raised here. For example, even if the USD (or DXY) were to spike to record new highs (Johnson), this ignores the far more salient issue of the Dollar’s inherent purchasing power, which has lost greater than 98% against gold since 1971.

In short, percentages, theories and data matter, but regardless of where the USD goes relative to other broken fiat currencies, its inherent purchasing power has been falling faster that its relative strength.

Perhaps in the next conversation, this key point can be more directly addressed. Meanwhile, as the debates continue, so too does the rise in gold.

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Matt began his finance career as a transactional attorney before launching his first hedge fund during the NASDAQ bubble of 1999-2001

Thereafter, he began investing his own and other HNW family funds into alternative investment vehicles while operating as a General Counsel, CIO and later Managing Director of a single and multi-family office. Matthew worked closely as well with Morgan Stanley’s hedge fund platform in building a multi-strat/multi-manager fund to better manage risk in a market backdrop of extreme central bank intervention/support. The conviction that precious metals provides the most reliable and longer-term protection against potential systemic risk led Matt to join VON GREYERZ.

The author of the Amazon No#1 Release, Rigged to Fail, Matt is fluent in French, German and English; he is a graduate of Brown (BA), Harvard (MA) and the University of Michigan (JD). His widely respected reports on macro conditions and the changing behaviour of risk assets are published regularly at

Gold weighs 19.3 times as much as an equal volume of water.
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