Dollar Forecast 2025: Milkshake, Collapse, or Stagnation?

The U.S. dollar dominates global markets, sparking both admiration and criticism. But where is it headed in 2025 and beyond? Will it absorb global liquidity, crash under hyperinflation, or simply stumble along in uncertainty?

Two major economic thinkers—Brent Johnson and Peter Schiff—present sharply contrasting views. Adding to the mix is a third, less-discussed perspective that could reshape the debate. In this analysis, we’ll break down Johnson’s Dollar Milkshake Theory, Schiff’s gold-backed collapse scenario, and a systemic wildcard threat, comparing their short-term (1-5 years) and long-term (5-20+ years) forecasts.

Let’s dive into the future of the greenback and see whose predictions hold the most weight.

Key Players in the U.S. Dollar Debate

Before predicting the dollar’s future, let’s examine the perspectives shaping the conversation.

The Systemic Wildcard: Dollar Shortages Driving Volatility

One theory suggests that the dollar’s movements are not driven by dominance, but by scarcity. This perspective envisions a scenario where global financial markets experience severe dollar shortages, causing the currency to spike due to sheer necessity rather than strength.

During financial crises—such as the 2020 repo market freeze—foreign reserve managers sell U.S. Treasuries to cover dollar shortfalls, pushing yields higher and destabilizing global markets. The Federal Reserve plays the role of a crisis manager rather than an omnipotent force, struggling to contain the fallout. In the long run, this scenario suggests the global financial system may require a reset, possibly through gold, cryptocurrencies, or a new international reserve framework.

Brent Johnson: The Dollar Milkshake Theory

Brent Johnson, CEO of Santiago Capital, argues that the U.S. dollar will strengthen significantly due to global liquidity dynamics. His Dollar Milkshake Theory suggests that the U.S. economy acts like a giant straw, sucking up liquidity from global markets while other economies weaken.

Johnson believes that as central banks worldwide flood their economies with money, much of it eventually flows back into the U.S. due to higher interest rates, deep capital markets, and the dollar’s status as a safe-haven currency. This demand, coupled with emerging markets struggling to service their dollar-denominated debt, could push the Dollar Index (DXY) past 120. However, this strength could eventually become unsustainable, leading to a sharp reversal.

Peter Schiff: The Dollar’s Impending Collapse

Peter Schiff, a well-known advocate for gold and CEO of Euro Pacific Capital, paints a far grimmer picture. He predicts that mounting U.S. debt—expected to reach $36 trillion in 2025—along with ongoing money printing and trade deficits, will eventually erode the dollar’s value.

Schiff forecasts that inflation could spiral out of control, with CPI hitting 15%, causing foreign investors (such as China) to dump U.S. Treasuries. This scenario would lead to a collapse in the dollar’s purchasing power, a surge in gold prices to $5,000+ per ounce, and a global financial shift away from the greenback. He argues that Johnson’s theory underestimates the risks of a rapid decline, insisting that a dollar crisis is not a matter of “if” but “when.”

Short-Term Dollar Forecast (2025-2030)

Looking at the next 1-5 years, will the dollar continue to strengthen, or is a downturn imminent?

Systemic Wildcard: Shortages Fuel Temporary Strength

The systemic wildcard theory suggests that the Dollar will experience temporary surges in value during liquidity crises. For instance, in March 2020, the DXY spiked from 96 to 103 as global demand for dollars soared. A similar trend occurred in late 2024, when 10-year Treasury yields rose from 4.15% to 4.8%, driven by foreign reserve sell-offs.

As of March 2025, the DXY sits at 104. If another financial panic occurs, it could climb to 110. However, these gains would likely be fragile and short-lived, as they’re rooted in temporary market stress rather than sustained strength.

Brent Johnson: Continued Dollar Strength

Johnson remains bullish on the dollar’s short-term outlook. With Federal Reserve interest rates at 4.75% and Europe’s rates at just 2%, capital inflows into the U.S. remain strong. In Q1 2025 alone, $300 billion flowed into U.S. assets. Geopolitical instability (Ukraine, Taiwan) further supports the dollar as a safe-haven asset.

Johnson expects the DXY to reach 130 by 2028, as emerging markets struggle under the weight of $13.4 trillion in dollar-denominated debt. While this strength is not indefinite, he sees continued dominance for at least the next five years.

Peter Schiff: Inflation’s Slow Burn

Schiff warns that inflation, currently at 4.2% CPI (February 2025), is a precursor to more serious problems. While not yet catastrophic, he argues that the Federal Reserve’s rate hikes to 4.75% are merely delaying the inevitable.

Foreign holdings of U.S. Treasuries have declined by 5% since 2023, and Schiff believes this trend will accelerate, pushing yields to 6% or higher. If this happens, stock markets could decline, gold could rise above $5,000 by 2027, and the DXY could drop below 60 as confidence erodes.

Short-Term Winner: Brent Johnson

In the 2025-2030 timeframe, Johnson’s thesis appears to hold the most weight. Current data supports his capital inflow-driven dollar strength, though the systemic wildcard’s volatility remains a factor. Schiff’s inflation concerns are valid but not yet severe enough to trigger an outright collapse.

Long-Term Dollar Forecast (2030-2045)

What will the dollar’s role be in the next 20 years?

Systemic Wildcard: A Global Reset

This theory suggests that persistent Dollar shortages will eventually trigger a systemic crisis, forcing a global financial reset. With $14 trillion in offshore Dollar debt, a breakdown in confidence could accelerate the rise of alternative monetary systems—whether gold, digital currencies, or a new reserve currency backed by a basket of assets. BRICS nations are already working toward Dollar alternatives, increasing trade in local currencies and stockpiling gold to reduce dependence on the greenback. By 2040, the DXY could decline to 90, reflecting a significant loss of global dominance.

Brent Johnson: A Rise Before the Fall

Johnson’s long-term view sees the DXY reaching 160 by 2035, draining emerging markets dry. However, by 2040, the Dollar’s overreach may backfire, leading to a multipolar currency system. The rise of a gold-backed yuan, a BRICS alternative, or even Bitcoin surpassing $1 million could erode the Dollar’s supremacy, pushing the DXY down to 70.

Peter Schiff: Hyperinflation Scenario

Schiff envisions a financial meltdown by 2035, where excessive debt—expected to exceed $40 trillion—triggers a collapse in the U.S. bond market. Foreign investors could dump $5 trillion in Treasuries, pushing yields to 10% and causing stocks to crash by 70%. In this scenario, gold would surge to $10,000 per ounce, and the Dollar would lose its status as the world’s reserve currency. BRICS nations, already moving toward Dollar alternatives, could accelerate the shift by increasing trade in local currencies, boosting gold reserves, or even launching a new reserve currency to challenge U.S. dominance.

Long-Term Winner: The Systemic Wildcard

While Schiff’s hyperinflation scenario remains a possibility, the systemic wildcard theory—which predicts the gradual erosion of Dollar dominance—appears more likely in the long run. Johnson’s outlook of a peak followed by a decline also aligns with historical trends. Ultimately, the systemic wildcard theory seems to offer the most probable long-term path for the Dollar.

Final Thoughts: What This Means for You

The dollar’s trajectory will shape global markets, personal investments, and even the price of everyday goods.

2025-2030: Brent Johnson’s strong dollar thesis dominates—U.S. assets remain attractive.
2030-2035: Systemic stress increases—gold and alternative assets gain traction.
2035-2045: Systemic wildcard and Schiff’s hyperinflation scenario take the lead—diversification into commodities, gold, and digital assets becomes essential as the Dollar’s dominance weakens.

For now, the dollar remains strong. But cracks are forming, and the next decade could redefine global finance. Stay informed, stay prepared.

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