Bitcoin and the Dollar Milkshake: Why the World’s Money Is Disappearing

The “dollar milkshake” theory — the idea that global dollar liquidity is being sucked into the US, leaving other currencies debased — has Bitcoin implications. Understanding this dynamic helps explain why Bitcoin adoption accelerates in certain markets.

The Dollar Milkshake Mechanism

The concept (popularized by Brent Johnson) describes how dollar strength works:

The dollar is the world’s reserve currency: Most global trade is invoiced in dollars. Most commodity prices (especially oil) are denominated in dollars. Global debt is substantially dollar-denominated.

When the Fed raises rates: Capital flows toward the US seeking higher returns. Dollar strengthens. Other currencies weaken as capital leaves.

The feedback loop: Dollar strengthens → emerging market companies with dollar debt see their local currency revenues worth less in dollars → they struggle to service dollar debt → more capital flees emerging markets toward dollars → dollar strengthens further.

The result: the Federal