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The ‘reverse Kindleberger Trap’: reasons to worry about the next financial crisis
EXPERT COMMENT
A US crisis is very likely to be associated with a capital outflow, rather than a capital inflow, with the result that the dollar could weaken substantially against other currencies.
A worrying feature of the next big financial crisis is that we may lack a dominant power able and willing to stabilise the international economic order.
That would certainly have been the view of the late economic historian Charles Kindleberger, who argued that the length and depth of the 1930s Depression was due to the failure of either Great Britain or the US to act as a responsible hegemon in the global economy.
Kindleberger’s view was that an impoverished Great Britain, the declining hegemon, was unable to provide leadership; and that an isolationist US, the rising hegemon, was unwilling. Hence, the eponymous trap.
And so, the world lacked an open trading system, any credible coordination of economic policies, or a reliable international lender of last resort.
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Original article link: https://www.chathamhouse.org/2026/09/reverse-kindleberger-trap-reasons-worry-about-next-financial-crisis
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