Dollar Milkshake Theory Explained Like You're 5

[@planttheseed2129]

Take a shot every time Rhett says the word "Cookie".

[@RhettReisman]

Don’t tho you’ll die and I need all the views I can get 🙏

[@planttheseed2129]

@@RhettReisman haha

[@Leon-cv7rw]

Literally more confusing than just using dollars in the example

[@RhettReisman]

I agree

[@antinominianist]

The main problem with this analogy is that cookies have no counter-party risk. You can hold (self-custody) as much cookies as you want. But in the current monetary system, money (cookies) exists as bank deposits that are only insured up-to a limit, and banks immediately turnaround and buy government bonds (cookie IOU) using deposits that are transferred in. And they have to sell these government bonds (cookie IOU) to generate enough for inter-bank transfers and ATM withdrawals. When there are so many bonds (cookie IOU) being sold by banks, there will two different types of banks: 1. foreign banks (Bank of China, Russia) + small local banks (Silicon Valley Bank) which do not get enough for their bonds (cookie IOU) and perhaps default on inter-bank transfers and ATM withdrawals 2. big local banks (JP Morgan) which get their bonds valued at par by whatever acronym the central bank invents (QE, BTFP etc), and this steals bond (cookie IOU) sales proceeds owed to foreign banks and small local banks inside the central bank ledger which the banks can use to settle inter-bank transfers and ATM withdrawals and use it to pay big local banks (JP Morgan). Sure this keeps big local banks and their customers solvent, but every other bank defaults on foreign dollar deposits (cookies), and small bank dollar deposits (cookies). Things can evolve in many directions from here. What has happened so far is 1 in 5 barrels of oil are being traded without using dollar. Foreign governments are not buying more long term US government bonds. Some like China are converting their US long term bonds into gold. And gold has been reasonably soft pegged to oil and world stock index for a while now.

[@RhettReisman]

Great points 💯💯

[@JohnPolanski16]

this was awesome man. truly appreciate you taking the time to do this for us kindergarten dropouts.

[@RhettReisman]

Anytime homie 🫡

[@God_is_my_savior-316]

Very confusing. Why the distraction bird noises?

[@austinfrazier7325]

Good job man. I understood all of this already (thanks daily Trader University videos) but this was a great explanation. Most of the general public has zero or cursory knowledge of this. This wasn’t taught in any class I ever took. it’s sad.

[@RhettReisman]

Thanks man 🙏 it's definitely an interesting theory and it makes a lot of sense

[@ericm7572]

Good job Rhett. Another solution is Bitcoin and/or BRICS. Both in progress. So is building enough of a military presence to give the hegemony pause. All empires end. This one is not going to be the exception, unless of course it ends us all.

[@christ-centeredcrypto]

It was good, I shared it with my group! Been a fan of this theory for a while now... amazing how it has played out the past few years and continues to...

[@RhettReisman]

Totally! Thanks man

[@jimreitz768]

Thanks! Here's some of Timmy's Mom's cookies to buy yourself a milkshake. ;-)

[@RhettReisman]

Thanks Jim! 🍪🙏

[@trevora.875]

Epic analogy! I’ve been trying to understand this topic and also the the Eurodollar (was dumbfounded when I realized it had nothing to do with the Euro currency). Thanks for the simplified explanation

[@RhettReisman]

It is so crazy that the Eurodollar system even exists lol. I had the same reaction you had

[@yunglung710]

So do we want to save cash or buy dollar denominated assets now because those will rise?

[@RhettReisman]

Who knows 🤷🏻‍♂️

[@RhettReisman]

Did any of that make sense or are you even more confused now? 🍪💵🥤

[@NWforager]

more confused and now detest dolphin talk 💦

[@maxreisman9595]

Perfect sense. I should have bought more graded Charizard cards but didn’t, and now I’m stuck with Belvita’s

[@RhettReisman]

@NWforager noted 🐬

[@RhettReisman]

@maxreisman9595 yeah we’re all smooth brains compared to that guy who Logan Paul bought the charizard from 🤷🏻‍♂️

[@CMVBrielman]

Both

[@Mokinono45]

This is the most brilliant video I have ever seen.

[@RhettReisman]

Galaxy brain concept. Thank you brother 🙏

[@ThrashLawPatentsAndTMs]

Great Video. Interesting theory. So, why didn't this "melt up" happen to the British Pound, and what makes the US$ different this time?

[@AidenWilliams-dw6ry]

It's mentioned in the video that even if you don't like Timmy's moms cookies, remember that she has the entire military at her exposure and can send them to beat you up. (In short US military is supposedley more powerful and people love to use USD for debts caz it has the best backing). Also I'm just some teenager whos only been in finance for a year so I could likey have this wrong.

[@ThrashLawPatentsAndTMs]

@@AidenWilliams-dw6ry When the pound collapsed, the British had a fine military (and an empire). Arguably, their military spending contributed to the collapse of the pound. So, the question remains solid. The answer I was anticipating was that a "Mary" moved to the neighborhood with new even better THC-laced chocolate cookies (and although smaller, an adequate military), and all of a sudden Timmy's cookies were worthless.

[@RhettReisman]

I think it’s also that because of petrodollar agreements (countries HAVE to use dollars to transact in oil trade internationally) there’s constant demand for the dollar (and a direct tie to limited natural resources). If those agreements go away (they seem to be slowly going away) the dollar should weaken similar to the pound (or should weaken faster at least).

[@ThrashLawPatentsAndTMs]

@@RhettReisman Petrodollars: Kind-of like the "sole source of milk" in the neighborhood requiring trade in Timmy's cookies, eh? Interesting that just this week Saudi Arabia dropped the petrodollar, the second largest producer is Russia cannot trade in dollars. This means only 1 of the top three petrol producers -- the USA itself -- still requires dollars to transact.

[@RhettReisman]

Im pretty burnt out on the metaphor (I’m like the frankenstein doctor of these cookies) but yes lol exactly

[@123456tyuhgfdse]

I love the idea of explaining like a 5 year old

[@RhettReisman]

It’s probably close to the average reading level on the internet lol

[@nicholasimkamp7805]

Not only does this show that holding on to cash is a good idea but wouldn't it be good to hold on to scarce assets (Charizard cards, real estate, commodities, btc, etc)?

[@RhettReisman]

Great point - I think the fund that originally put out this analysis is a gold fund. I think this analysis grew in popularity as a counterpoint to the people who were screaming cash is trash (which seems to be less true today than when everyone was screaming it 18 months ago)

[@christ-centeredcrypto]

Totally depends on one's timeline for investing as well as their need for liquidity. Hold on to a cookie IOU too long and you're most certain to never taste it's deliciousness! 😏

[@francisnolan4759]

Brilliant metaphores and references mate!😂

[@RhettReisman]

Cheers man haha glad to help :)

[@God_is_my_savior-316]

Why isn’t it the cookie theory? What do cookies have to do w milk shakes?

[@captaindoomsdayreloaded6685]

I am not sure that using cookies as a substitute for dollars is the best metaphor. A cookie has two values. A use value - you can eat it. An exchange value - you can trade it. The dollar has very little use value but a lot of exchange value. In addition, the cookies that are owed and traded on the playground are not owed to Timmie. Therefore, he bears little risk if there is a default. The dollars that are owed and traded outside the U.S. are not owed to the U.S.

[@RhettReisman]

The metaphor is perfect. Everything I said made sense. I am a very stable genius.

[@CarAudioInc]

I gotta get me some of Timmy's mom's cookies.

[@RhettReisman]

Frfr they’re 🔥

[@JS-jh4cy]

You know things are getting bad if kids need to have multi millions in their portfolio before finishing high school in order to hope for a retirement when they get old

[@RhettReisman]

Yeah thankfully my 5 year old has already had multiple 9 figure exits so he should be able to retire middle class

[@ikust007]

Discovered I loved brownies !

[@RhettReisman]

The metaphor is too deep haha

[@janicejohnson1334]

What Tha ??? .. What Tha ??? .... What just happened here ? ? ? . .. I came looking for a milkshake primer and I just got served with Timmy Turner Mom cookies . . . Where's CARL ???????

[@RhettReisman]

Carl is from Jimmy Neutron not Fairly Odd Parents. Common L

[@RhettReisman]

CAAAAAARLLLLL!!!!

[@jimreitz768]

OK, I think I got most of it. But, is the "slow process" of agreeing to use Belevita or Oreo's for good stuff (creating new and different pinky promises) really that slow? it seems like the other two rich bullies on the playground (Johnny and Joey) have already started doing it. And they have some pretty good stuff they're willing to sell for only Joey's mom's cookies.

[@RhettReisman]

People have been talking about Johnny and Joey 🇨🇳🇷🇺 using their cookies for a while - I expect that, like many other phenomenon, it will start slowly and then be very sudden (which might be what we're seeing now). I'm also an idiot though so who knows haha

[@ikust007]

Thank you mate !

[@RhettReisman]

Hopefully that helped :)

[@Jeshua14Yeshua]

First time I’ve ever heard the word puffeth 😂

[@RhettReisman]

Cunning linguist alert 🚨

[@absolutebosscollective8202]

I want some cookies. Thank you!

[@RhettReisman]

Cheers :) 🍪

[@richiebtcrich7846]

Oof, I kept hearing Velveeta Cookies..

[@RhettReisman]

Can’t spell Velveeta without L

[@Sir__Jason]

Wow that was great lol 🍪

[@RhettReisman]

🥛 🍪 📈

[@maspesasmasperras5554]

@@RhettReisman Now do one with the hamburger peso theory

[@penelopepitstock]

that was very helpful thank you

[@RhettReisman]

No problem 💵 🥤

[@crazyprayingmantis5596]

You can't use words like "Status quo" when talking to a 5 yr old

[@RhettReisman]

Good point I’ll rewrite the video

[@crazyprayingmantis5596]

@@RhettReisman Good, hurry up

[@RhettReisman]

It’s fixed, try watching it again

[@crazyprayingmantis5596]

@@RhettReisman I like your sense of humour

[@RhettReisman]

😂🤣

[@JimBob-wi3rq]

Well done! I was also confused by watching the DMT videos. Thank you

[@RhettReisman]

For real some of that stuff is so needlessly complicated

[@LukeDickerson1993]

if the other kids owe each other timmy's mom's cookies couldnt they just forgive/cancel out each others pink promises?

[@RhettReisman]

Yeah but unless one of them makes a better cookie, Timmy’s still gonna have the best thing to trade for on the playground so they’re just gonna end up owing each other more of Timmy’s cookies in the future

[@muaddib7685]

How did you not get the theory? Its pretty strait forward. Yet bruh, somehow describes the theory so that its almost impossible to understand.

[@RhettReisman]

I only explained it for 5 year olds. If you are 3 years old you will have to wait 2 more years until you get it

[@johnsmith-dm2tq]

omg ty.

[@RhettReisman]

Any time 🍪

[@mdiesel23]

Would die to get a taste of Timmy's mom's 🍪 cookies. 😅 😉

[@RhettReisman]

Fr fr

[@janicejohnson1334]

How about . . . Dump all that fiat currency / Forget Cash. . and hold Physical PM & Real Estate

[@RhettReisman]

What’s PM

[@theinfohoarder]

luv it

[@RhettReisman]

🍪🍪🍪

[@current9455]

Milk and cookies

[@RhettReisman]

Make the world go round

[@taniakaulitz6490]

This explanation just got way more hard to understand than explaining like an economist. Too many interruptions, memes, sounds, idk...

[@RhettReisman]

You’re welcome

[@mattistewart9558]

Timmy's mum sounds hot to me.

[@RhettReisman]

She’s got it goin on

[@theMaSch21]

#Bitcoin fixes this!

[@RhettReisman]

Exactly haha

[@mlbonfox8199]

Timmy’s mom hot though!

[@RhettReisman]

Would

[@MrDwizzle]

First!

[@RhettReisman]

GOAT 🐐

[@trading8]

Oh man, that beep out sound is so annoying! Why?? Just don’t swear, or at least use something less irritating

[@RhettReisman]

I watched too much spongebob when I was little 🤷🏻‍♂️