LaToya Scott
3 min read
The U.S. is at risk of a financial crisis similar to the 2022 U.K. meltdown, former Treasury Secretary Larry Summers warned.
“I would have said a ‘Liz Truss moment’ was very unlikely in the U.S. if you had asked me three months ago," Summers said in an April 22 interview with BBC Radio, according to Business Insider. “Now I think we’re on a path towards having an episode like that. I think it will be very costly for our economy — and for the global economy.”
Summers' comparison pointed to Truss's brief term as British prime minister, when her unfunded tax cut proposals triggered market chaos, a bond yield spike, and ultimately her resignation just 44 days into her tenure—the shortest in British history.
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According to Reuters, gold touched $3,500.05 per ounce on April 22, rising 31% since January. Investors turned heavily toward safe-haven assets amid fears of spiraling economic instability.
Summers told the BBC that the U.S. financial system is exhibiting signs similar to emerging market economies under duress.
“Stocks go down, bonds go down, the currency goes down, gold starts to be hoarded, that’s the pattern we’re seeing in the U.S.,” he said. Summers warned that the endpoint remains uncertain but urged caution given the current trajectory.
Economic conditions have remained volatile. In April, the dollar index weakened, boosting gold's appeal, although it later rebounded slightly amid signs of easing U.S.-China trade tensions.
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Adding to the market unease, President Donald Trump announced a sweeping 145% tariff on Chinese goods earlier in April. The decision sparked a sharp sell-off across Wall Street, deepening fears of a prolonged trade war.
Following the announcement, Summers posted on X, stating, “Never before has an hour of Presidential rhetoric cost so many people so much,” estimating the loss from the new tariff policy could reach $30 trillion, roughly $300,000 per American family.
Trump's actions toward the Federal Reserve also contributed to market anxiety. In an April 21 Truth Social post, he sharply criticized Fed Chair Jerome Powell, calling him a “major loser” and “Mr. Too Late” for not cutting interest rates sooner.
