Donald Trump has "no idea" his MAGA group is fighting a "war on financial stability," a Nobel Prize-winning economist has claimed.
The president seems to be blind to issues of the economy as expert Paul Krugman explains how "allies and cronies" are having more of an effect than Trump on the cost-of-living crisis. Krugman has since predicted a 2008-like crash in his latest Substack post, calling for Americans to brace themselves for turbulent times as the Trump administration picks apart economic safeguarding measures.
Krugman wrote, "The MAGA war on financial stability is being waged largely on two fronts. First, there’s an ongoing effort within some parts of the Federal Reserve to drastically weaken bank supervision — oversight of banks to prevent them from taking risks that could threaten the financial system."
"The second front of MAGA’s war on financial stability is on behalf of the crypto industry. The Trump administration and its allies in Congress — including, I’m sorry to say, a number of Democrats in this case — are moving to promote wider use of crypto."
"In particular, the GENIUS Act (gag me with an acronym), passed in July, aims to promote stablecoins. And the fact is that stablecoins are effectively an alternative, weakly regulated and poorly supervised form of banking."
How much of the blame Trump can shoulder is unknown so far, as Krugman believes there are problems at play the president is simply yet to notice. He continued, "But here we are in 2025, and 2008 wasn’t that long ago. Many of us still have vivid memories of the gut-wrenching panic that gripped the world when Lehman fell."
"Yet Donald Trump’s allies and cronies are now moving rapidly to dismantle the precautionary regulations introduced after 2008 to reduce the risk of future financial crises. I say 'allies and cronies' advisedly."
"There’s no indication that Trump himself has any idea what’s happening on his watch. But key players in Congress, within the administration, and, alas, at the Federal Reserve, are apparently determined to make a 2008 rerun possible."
Krugman has since urged the Democratic party to be well aware of the financial shortcomings of the Trump administration and its tariff policy, warning that they could be set to manage a 2008-like crisis should they be successful at the 2028 elections.
The economist warned, "Along with its many other sins, the Trump administration is doing its best to make a future financial crisis more likely. I hope the Democrats are paying attention and won’t let themselves be seduced by Wall Street and, worse, the blandishments of the crypto bros.
"Because if they don’t, they could set themselves for a 2008-type crash during a Democratic administration. And we can guess who will get the blame."
