Economist Peter Schiff said a financial crisis more severe than the 2008 collapse is approaching this year, arguing that U.S. economic policy has fundamentally misread global capital dynamics and risks triggering a sharp break in confidence.
What Happened
In posts on X, Schiff said the coming downturn would differ from 2008 in one critical respect: it would not be global.
“The main difference between the 2026 financial crisis and the 2008 financial crisis, other than the fact that this one will be much worse, is that it won’t be global,” Schiff wrote, adding that other economies could benefit as the “burden of supporting the U.S. consumer economy will be lifted.”
Schiff directly linked the risk to Washington’s trade and economic stance under President Donald Trump, accusing the administration of misunderstanding who ultimately finances U.S. consumption.
“There’s an old expression: ‘Don’t bite the hand that feeds you,’” Schiff wrote. “Donald Trump didn’t just bite the hand that has been feeding the U.S.—he bit it off.”
Dwindling Demand For U.S. Dollar
His warning echoes concerns voiced by prominent investors about capital flows and trust in U.S. assets.
Speaking at the World Economic Forum in Davos, billionaire investor Ray Dalio said escalating trade disputes could spill over into what he described as “capital wars,” where foreign investors reassess their willingness to hold U.S. debt.
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“On the other side of trade deficits and trade wars, there are capital and capital wars,” Dalio said, warning that reduced appetite for U.S. Treasurys would pose a serious challenge as deficits expand.
Dalio pointed to history, noting that during periods of geopolitical and economic conflict, even allies tend to reduce exposure to one another’s debt and gravitate toward hard assets.
He advised diversification and highlighted gold as an effective hedge during financial stress, recommending it comprise between 5% and 15% of portfolios.
Market behavior has begun to reflect these tensions.
Treasury prices fell this week as investors weighed renewed tariff threats from Washington, including proposals tied to disputes over Greenland that revived fears of a broader trade conflict with Europe.
Era Of Deep Institutional Mistrust
At Davos, Larry Fink, chief executive of BlackRock, framed the moment more broadly as one of eroding confidence.
He said global institutions now face “deep institutional mistrust,” arguing that established systems must rebuild credibility to remain effective.
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