On My Radar - Our Dollar, Your Problem

Written By Steve Blumenthal

August 29, 2025
By Steve Blumenthal

“The dollar is our currency, but your problem.”

— John Connolly, U.S. Treasury Secretary

During the 1971 G10 meetings in Rome, U.S. Treasury Secretary John Connally made this candid remark to European finance ministers. The statement underscored the U.S.'s stance that while the dollar served as the global reserve currency, the challenges arising from its fluctuations were primarily concerns for other nations. This sentiment highlighted the geopolitical leverage the U.S. held due to the dollar's central role in international finance. It sure feels like we have arrived at a similar moment.

To think this makes us immune to event risk today would be naive. Yes, the U.S. has the world's best capital markets platform. Yes, the U.S. has a robust regulatory structure and a strong rule of law. However, China is a rising power that seeks to challenge the dominance of the U.S. dollar. “Our currency, your problem” may also become a U.S. problem over the next several years.

In this direction, I would like to share with you an interview with Ken Rogoff, discussing his new book, Our Dollar, Your Problem. 

What does this mean for the dollar, inflation, Bitcoin, Ethereum, Gold, and other hard assets? This is a complex topic we’ll continue to explore in future letters.

For now, grab your coffee and settle into your favorite chair.

On My Radar: 

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Our Dollar, Your Problem

Ken Rogoff's new book "Our Dollar, Your Problem" explores his views on global finance, inflation, and the future of the U.S. dollar. Rogoff’s book caught my eye primarily due to the public attention Treasury Secretary Scott Bessent has drawn to the issue. It’s coming, and the implications for asset markets are profound.

On December 11, 2024, Bessent hinted at the need for a new international agreement on the scale of the 1944 Bretton Woods Agreement, suggesting that the Trump administration’s decisions will shape the global economic order for decades.

In an interview this week with Anthony Scarmucci, Rogoff highlights the importance of independent central banks, citing his early work at the Federal Reserve. Rogoff warns of potential economic crises, predicting a debt crisis within five years due to rising interest rates and inflation.

He emphasizes the erosion of the U.S. dollar's global dominance, driven by political interference and unsustainable fiscal policies. Rogoff also discusses the rise of gold and cryptocurrencies as alternatives to traditional currencies, underscoring the need for regulatory oversight.

  • “Gold is the new gold.”

  • “Inflation is going to happen again.”

  • “The US dollar is going to get knocked down a couple pegs.”

By now you are well aware of my view that we are racing towards what Treasury Secratary Scott Bessent calls, “A global grand reordering.” In short: some form of system wide sovereign debt restructuring. It is like a corporate restructuring but on a much larger scale. I’m guessing by 2028.

This explains why the following caught my eye. Rogoff predicts a system-wide reset within the next 5 years. He added, “The Fed won’t own $7 trillion in U.S. Government debt, they’ll own $25 trillion.” Wrap your head around that. I maintain the view that the current outstanding debt balance of $37 trillion is on its way to $50 trillion. And the Fed will own $25 million of it.

Ken Rogoff's Background and Previous Work

  •  Started career as junior economist at Federal Reserve

  • Former professional chess player, represented US in World Chess Championships

  • Wrote influential book "This Time is Different" about financial crises ~15 years ago

  • Current book "Our Dollar, Your Problem" examines 7 turbulent decades of global finance

US Dollar Dominance and Potential Decline

  • Title references John Connolly quote: "The dollar is our currency, but your problem"

  • Predicts some form of US debt crisis likely within 5 years

  • Potential outcomes: massive Fed debt purchases, inflation burst, partial debt default

Click on Ken’s picture below to watch or listen to the 26-minute YouTube discussion. Worth the listen! A few more summary notes follow as well.

Source: Click on photo

A few more summary notes from the interview.

  • The US dollar's dominance is likely to decline in the next 5-7 years due to debt issues, potential loss of Fed independence, and global trust erosion.

  • Inflation remains a significant concern, with impacts often under-appreciated by the public.

Bottom line on blockchain and bitcoin:

  • Ken Rogoff sees blockchain technology as having tremendous innovation potential but still operating in a "Wild West" environment that needs proper regulation to benefit in the long run.

  • He sees two key roles for digital currencies like Bitcoin:

    • 1. Global underground economy - The use isn’t just illegal activity, most of it is tax evasion and legitimate transactions outside traditional banking systems.

    • 2. Emerging markets protection - People in countries with unstable governments or currencies use Bitcoin as an asset their government can't easily confiscate or devalue. Western democracies often don't fully appreciate the pain citizens in Africa and South America experience from currency devaluations and government seizures of assets - which creates a significant market for decentralized digital currencies outside the Western financial system. Scaramuchi pointed out that even skeptics like Jamie Dimon acknowledge blockchain's future role in financial transactions.

  • The technology could revolutionize trade settlement times - moving from the current T+1 (trade day plus one day to settle) to T+0 (same-day/immediate settlement).

  • The implication is that while blockchain will transform financial infrastructure, digital currencies will likely coexist with traditional systems rather than replace them entirely, serving specific needs in global markets where trust in government-backed currencies is limited.

    Views are those of the presenters and are subject to change. Not a recommendation to buy or sell any security.

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Essential Beach Reading

 

Bright Spots

In a world full with a lot of negativity, here are few recent events:

  1. Space: SpaceX celebrated a game-changing milestone with its tenth test flight of the Starship rocket. This iconic craft’s full reusability and massive payload capacity could bring launch costs down to as little as $100 per kg—or potentially even $10, according to some optimistic estimates—unlocking entirely new possibilities in space access and innovation. The Times

  2. Health Innovation: Andhra Pradesh launched the Bharat Biodesign Research and Innovation (BRAIN) program, aiming to transform the region into a global health-tech and digital health hub. In partnership with the University of Western Australia’s AIM Foundation, the initiative focuses on AI-driven healthcare, predictive disease analysis, affordable medtech, and nurturing startups. The Times of India

  3. Health Technology: Human Health, founded by former Canva leaders, secured an $8.4 million AI-powered health innovation deal. Their platform, RhinoMAP, tracks inflammatory markers in patients with chronic respiratory conditions, utilizing nasal biomarkers and patient data to personalize treatments, potentially reducing ineffective therapies from 50% to just 10% within six months. The Australian

  4. Space Science: Scientists analyzing the interstellar object 3I/ATLAS discovered it's enveloped in a dense cloud of carbon dioxide far more than typical comets. The unusual CO₂ outgassing (at 16 times the expected levels) and lack of a comet-like tail have even led to speculative discussions about its origin. New York Post

    Hope to share more with you next week. Would love for you to share anything you find positive going on the world that I can include.

 

Trade Signals: Update - August 28, 2025

“Stay on top of the current market trends with Trade Signals.”

“Extreme patience combined with extreme decisiveness. You may call that our investment process. Yes, it’s that simple.”

– Charlie Munger

Trade Signals is Organized in the Following Sections:

  • Market Commentary and Notables This Week

  • The S&P 500 Index (Stocks) and The 10-year Treasury Yield (Bonds)

  • Trade Signals - Dashboard of Indicators

  • Market Valuations and Subsequent 10-year Returns

  • Supporting Charts with Explanations

Technicals, Fundamentals, Macroeconomics, and Investor Behavior

*Trade Signals basics: The Market Commentary section summarizes notable changes in the core key indicators: Investor sentiment, market breadth, stocks, treasury yields, the dollar, and gold. The Dashboard of Indicators provides a detailed view of all Trade Signals indicators.

Market Commentary

The risk-on appetite remains, as indicated by price behavior, retail investor behavior, and the availability of liquidity. The following charts illustrate investor behavior, liquidity, and risk appetite.

1) “It’s all retail driven!”

2) Credit spreads have rarely been this low. In other words, higher-risk corporations are having no trouble issuing bonds. Liquidity remains strong.

3) Looking at the riskiest assets, the story remains “risk-on.” Prices in both markets remain above their uptrending moving average trend lines.

Notables This Week:

  • The Weekly MACD for the S&P 500 Index remained bullish. The Daily MACD shifted to a bullish trend signal yesterday (August 20, 2025). Despite the extreme overvaluation of the S&P 500, the collective trend evidence remains bullish on equities. Note: I favor the Weekly MACD signal for trading purposes and the Monthly MACD for identifying the dominant trend (bullish or bearish).

  • The Weekly MACD trend in the 10-year Treasury yield continued to point towards declining yields—a bullish signal for bonds. The collective trend evidence for bonds, including the CMG NDR Zweig Bond Model, remains bullish on bonds (signaling lower interest rates).

  • The Weekly MACD trend for the Dollar remained bullish. The Daily MACD for the Dollar turned bearish. The Monthly MACD trend remained bearish. Our fundamental view remains bearish on the Dollar. A declining dollar is bullish for gold.

  • The Weekly MACD for Gold remains in a bearish trend signal. The Daily MACD turned bullish this week; the long-term secular trend remains bullish. Currently trading at $3,417, gold remains within a range-bound pattern, fluctuating between $3,450 (high) and $3,250. Our fundamental view remains bullish on Gold.

Key Macro Indicators - Investor Sentiment, Market Breadth, The S&P 500 Index (Stocks), The 10-year Treasury Yield (Bonds), and the Dollar:

The S&P 500 Index (Stock Market)

  1. Investor Sentiment (looking for Extreme Optimism or Extreme Pessimism)

  2. Market Breadth (looking for direction)

  3. S&P 500 Index Weekly MACD

Trade Signals is a free service for CMG clients. Click on LOGIN below to go to the Dashboard of Indicators, Key Macro Indicators, Investor Sentiment, Market Breadth, the Dollar, and Charts.

About Trade Signals

Trade Signals is a paid subscription service that posts the daily, weekly, and monthly trends in the markets (and more). Free for CMG clients. Not a recommendation to buy or sell any security. For discussion purposes only.

TRADE SIGNALS SUBSCRIPTION ACKNOWLEDGEMENT / IMPORTANT DISCLOSURES 

The views expressed herein are solely those of Steve Blumenthal as of the date of this report and are subject to change without notice. Not a recommendation to buy or sell any security.

Please note that the information provided is not recommended for buying or selling any security and is provided for discussion purposes only. Current viewpoints are subject to change. Please note that the information provided is not recommended for buying or selling any security and is provided for discussion purposes only. 

 

Personal Note: Opening Day

“Coming together is a beginning. Keeping together is progress. Working together is success.”

– Henry Ford

Labor Day weekend has arrived. Summer is coming to an end and the first glimpse of fall is in the air.

Game one is in the books, the season has begun, and the MP Fryers soccer team won 4-1. Coach was happy. The post-game IPA at the Flying Pig in Malvern tasted very good.

Football season has arrived. I have some interest in a few big games this weekend, including Texas at Ohio State at noon ET. I want to see what the OSU freshman quarterback has got. Being a crazed Penn State fan, I have to admit I’m pulling for the Longhorns. It’s in the blood (apologies to my OSU friends). I know you feel the same! It should be a great game.

Alabama vs Florida State, LSU at Clemson, and Notre Dame at Miami Sunday at 7:30 pm ET on ABC. Penn State opens against Nevada at home tomorrow at 3:30 p.m. ET. I’ll be watching. Penn State family… “We Are!”

It seems that the We Are chant is everywhere now, not just at Penn State. Here’s the back story. In 1946, Penn State was invited to the Cotton Bowl to face SMU, but pressure mounted to leave behind its two Black players, Wally Triplett and Dennie Hoggard.

Team lineman Steve Suhey reportedly said, “We are one,” emphasizing that the squad would stand together. The team traveled as a unit and played in a fully integrated manner, making history in the Cotton Bowl. Years later, Suhey’s words inspired Penn State cheerleaders to create the famous chant: “We Are… Penn State!”

A big shout-out to the Suhey family! And you’ll likely recall Matt Suhey. Matt played for the Chicago Bears. Matt is a dear friend, brother-in-law, and Uncle to my children. One of the greatest human beings I know. Steve Suhey was Matt’s father. We are, indeed!

Fall is in the air, and a new season has begun. Call your family, call your best buddies, and enjoy a small piece of life with them through the teams you root for together. Best of luck to your favorite team.

Kind regards,

Steve

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Stephen B. Blumenthal
Executive Chairman & CIO
CMG Capital Management Group, Inc.
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Stephen Blumenthal founded CMG Capital Management Group in 1992 and serves today as its Executive Chairman and CIO. Steve authors a free weekly e-letter entitled, “On My Radar.” Steve shares his views on macroeconomic research, valuations, portfolio construction, asset allocation and risk management. Author of Forbes Book: On My Radar, Navigating Stock Market Cycles.

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On My Radar - Rising Inflation, Bankruptcies, and Unemployment