The ‘Reverse Kindleberger Trap’: Reasons to Worry About the Next Financial Crisis

The author examines the risk of a future financial crisis occurring without a dominant power willing and able to stabilise the international economic order. Lubin contrasts the US response to the 2008 crisis with the conditions likely to shape a Trump-era crisis, citing the administration’s selective and transactional approach to currency swap arrangements, interventions by Treasury Secretary Scott Bessent that constrain price discovery in the Treasury market, and an historically elevated dollar driven by over a decade of capital inflows into US securities. He argues that these conditions make a future US crisis more likely to trigger a capital outflow and a weakening dollar, diverging from the pattern seen after 2008, and notes that this outcome may align with President Trump’s stated preference for a weaker exchange rate. On China, the author argues that Beijing has shown growing willingness to shape global economic governance but remains unable to act as a financial stabiliser given the renminbi’s limited international role. Lubin concludes that the resulting configuration constitutes a “reverse Kindleberger Trap,” in which the incumbent hegemon is unwilling to manage a crisis and the rising hegemon is unable to do so.