Greenback Gladiator
Doomsayers say the dollar’s dead...but George Gammon says not so fast. What if the real risk is too few dollars, not too many? Are the bears looking backwards?
“The graveyards are full of experts who predicted the dollar’s demise.”
— Someone watching DXY bounce off 90 for the umpteenth time
If you’ve been anywhere near FinTwit, YouTube, or the darker corners of macroeconomic Reddit recently, you’ve probably heard it:
“The dollar is done.”
“The end of reserve currency status is nigh.”
“Buy gold, silver, Bitcoin, land, ammo, and maybe a bunker in Uruguay.”
The greenback, it seems, is the latest contestant in the perpetual game of “Collapse of the Week.”
But hold your horses…or your yuan.
George Gammon, resident monetary mechanic and host of Rebel Capitalist, has stepped into the ring, calling foul on the dollar doom crowd.
And he’s not just brushing off the alarm bells.
He’s offering a full breakdown of why the dollar isn’t just not crashing, but may soon rally to triple digits on the DXY.
Let’s lift the hood and take a look.
Apocalypse... Not
The dollar dropped a dramatic 1% on the DXY index the other day…a move usually reserved for events like the Great Financial Crisis or the COVID crash.
Cue the doomsday prophets.
“Foreigners are dumping treasuries!”
“BRICS are coming for the reserve crown!”
“Peter Schiff was right!”
Not so fast, says Gammon. These arguments might be emotionally satisfying, but they collapse faster than a meme coin under scrutiny.
The bears are barking up the same tree they’ve been circling since the Clinton administration. And if you’ve been paying attention, you’d know they’ve been wrong longer than Blockbuster has been out of business.
Take twin deficits…one of the crowd’s favorite red flags.
Fiscal deficit above 6% of GDP, current account deficit over 3%.
Sounds catastrophic, right?
Yet over the past 40 years, there’s no meaningful correlation between twin deficits and the value of the dollar.
In fact, since 2008, as deficits ballooned, the dollar strengthened.
The DXY was scraping the 70s during the GFC, and despite recent dips, it’s still well above its long-term average.
So what gives?
De-Dollarization: Barking, Not Biting
The bears pivot to de-dollarization. BRICS this, gold reserves that.
Yes, central banks…especially in China and Russia…are diversifying.
According to the IMF, the dollar’s share of global reserves has dropped from 71% in 2000 to 58% in 2023.
But context matters.
The euro sits at 20%, the yen at 5%, and the yuan? A generous 2%.
That’s not a tidal wave. That’s a ripple in a very big pool.
If the world were a high school lunchroom, the dollar is still the quarterback with all the friends.
The BRICS? They're sitting at a separate table, arguing about who forgot their lunch money.
Also, you’ll forgive us for not trusting a currency built on the foundation of “mutual suspicion.”
The Elephant Everyone Misses
Now here’s where Gammon goes from debunking to teaching.
The fatal flaw in the dollar-crash thesis is its obsession with demand. Will central banks keep buying Treasuries? Will trade still settle in dollars?
Important questions…but incomplete.
What everyone forgets is supply. Specifically, how dollars are created and destroyed.
Enter the Eurodollar system: a sprawling, opaque labyrinth of dollar-denominated debt mostly created by private, non-U.S. commercial banks.
According to the BIS, we’re talking $75 trillion worth.
And here’s the kicker…it’s not the Fed doing this lending. These dollars are conjured into existence when banks issue loans. When loans are paid back, the dollars disappear. Poof.
So what happens when companies around the globe start earning less in dollars…say, because of “de-dollarization”?
They still have to service their dollar debt.
That means they need to sell local assets…yen, yuan, real estate, whatever…to get dollars.
And when they pay those debts down? The dollar supply shrinks.
Shrinking supply meets constant or rising demand... you do the math.
This is why dollar-crash arguments so often end up making the case for a stronger dollar.
Less liquidity. Lower velocity. More panic-driven scrambles for greenbacks.
Bullish.
Eurodollar Jenga
Still not convinced? Gammon pulls out the Jenga tower metaphor, and it’s spot-on.
Imagine a Brazilian company borrowing dollars from a Cayman Islands bank. That bank might also be lending euros to a French bank.
Everything’s connected.
If the Brazilian company misses a payment, the Cayman bank tightens up lending.
Less lending, fewer dollars created, supply shrinks, DXY goes up.
Defaults? Even more deflationary.
A defaulted dollar loan means a bank liability disappears. No replacement dollar. The system contracts. Less dollar supply, stronger dollar.
Even quantitative easing doesn’t change the story.
The bears think QE floods the system with dollars. But it actually lowers velocity.
Japan is Exhibit A: four decades of QE, a 240% debt-to-GDP ratio, and deflation. Not inflation.
The more QE, the less money moves.
It’s like pumping air into a balloon that’s already full…it doesn’t go anywhere.
The DXY: Price Tag on a Phantom
The DXY isn’t a measure of dollar quantity. It’s a price…a relative one at that…weighted 83% toward the euro, yen, and pound.
The bears argue that dollar shortages in emerging markets won’t show up in the DXY if Europe and Japan don’t have issues.
But the system’s too intertwined for that to hold.
Gammon points to three major crises: the 2011 Eurodollar squeeze, China’s 2015 devaluation, and the 2020 COVID meltdown.
What did the DXY do? Spiked. Every. Single. Time.
Right now, the DXY has dipped. But support sits firmly at 90, and Gammon’s betting we won’t break below it. Why?
Because of that pesky $75 trillion in short-term dollar debt…most of it maturing in less than six months.
Every quarter, $50 trillion needs to be rolled over.
Try crashing the dollar when every major corporation on the planet needs to buy some to stay afloat.
What Would Make George Flip?
Gammon’s not married to his model…he’s just been right a lot more often than the other guys. But if the DXY breaks 90 and stays there for six months, he’ll admit he’s wrong. That’s his line in the sand.
Short of that, a dip followed by a snapback? That’s textbook.
As soon as the panic ends, borrowers come crawling back for dollars, and up we go again…maybe to 95, 97, or even 103.
And don’t forget: global GDP growth is projected to be a measly 2.4% in 2025, per the IMF. That’s not exactly a firehose of dollar liquidity.
The Punchline
Here’s the bottom line, folks:
The dollar ain’t going anywhere.
Sure, there’s de-dollarization noise, swelling deficits, and QE-addled headlines.
But the mechanics…the plumbing of the system….tell a very different story.
A story of scarcity. A story of interconnected liabilities. A story of tens of trillions of dollars that must be rolled over on short timelines, creating perpetual demand.
Until that fundamental structure changes…and it hasn’t…bets against the dollar are like buying flood insurance in the Sahara.
Want to bet on dollar collapse? Fine. But you better check when your loans come due.
Better yet, come hear George say it live, with a whiteboard and a marker in each hand. Grab your tickets to Rebel Capitalist Live at rebelcapitalistlive.com. The only thing falling faster than the dollar bear thesis is the availability of seats.
Catch you there…and remember: Stand up for freedom, liberty, and free-market capitalism.
We’re just getting started.