'Get cash out of banks!' Warning world faces 'biggest crash in history just like 2008'

A bank credit sell-off may signal the start of "the biggest crash in history", a personal finance expert has warned.

Robert Kiyosaki, author of financial self-help book Rich Dad Poor Dad, told his followers to take cash out of their banks.

He said: "Bank credit just sold off like 2008. Get some cash out of banks as you need cash. This may be the start of the biggest crash in history. Hope I am wrong yet no time to play Russian Roulette with your life."

Bank credit is the amount a person or business can take out as a loan from a bank. Mr Kiyosaki has repeatedly warned of a crash, having urged investors to get into bitcoin last month.

His warning was dismissed by some social media users, with one commenting: "Another day another Kiyosaki tweet calling for a crash".

The 2008 financial crash was triggered when Lehman Brothers collapsed. That sent shockwaves through the global financial system, leading to the failure of Northern Rock and merger of HBOS with Lloyds TSB.

Paulo Santos Monteiro, Professor of Economics at the University of York, said banks are not as vulnerable as they were in 2008 because of the reserves they have built up since.

He told Express.co.uk while banks' balance sheets are "much more resilient", the rise in interest rates introduced to tackle inflation has inflicted "stresses" for families who have to renew their mortgage deals.

Professor Monteiro said: "If, as seems likely, interest rates stay higher for longer, this may be a cause for concern for the UK economy. So I am much more concerned about the household sector.

"If the labour market stays strong we should be OK, but if not there could be a recession on the horizon. But it will be a traditional recession and not one like in 2008."

It comes after a senior IMF official warned the world economy is on the brink of a second Cold War. Gita Gopinath said an accelerating fragmentation of the world economy into regional power blocs risks wiping out trillions of dollars in global output.

The world economy is less resilient now than before the Covid pandemic with war in Ukraine and the Middle East adding to the strain.

Professor Sambit Bhattacharyya, Head of Department of Economics at the University of Sussex Business School, said the overall public debt burden also poses a threat, sitting "dangerously above" 90 percent of global GDP.

He added: "Western European and North American economies are significantly more leveraged than this average. Which makes them more vulnerable to trade, supply chain and currency related shocks."

Professor Bhattacharyya warned a diversion of global trade is now "inevitable" and will impose short and long-term costs on the world economy.

He warned: "Costs will fall unequally across countries and it seems likely that cost incidence on Western economies would be disproportionately higher.

"Western economies rely more on international trade to source raw materials, consumer goods, and food compared to their rivals."

A weaker global economy may lead to more inflation, unemployment, underemployment, a fall in living standards and possible cuts to public services for the average household in Britain.

Low-income households would absorb a "disproportionately large portion" of the costs, according to Professor Bhattacharrya.

But Dr Muhammad Ali Nasir, Associate Professor in Economics at Leeds University Business School, said the risk is not so much to the global economy, as it is the economy of the West.

He said: "[The] IMF's own projections suggest China and India will grow about five and 6.3 percent this year and will continue to grow at a good rate next year.

"There will be positive implications of economic cooperation among different parts of the world, so Western leaders will have to find ways of cooperating with the Global South to tackle economic as well as ecological and political challenges."

He added that for the average UK household, this won't be something to worry about too much as inflation has been coming down "very sharply".

Dr Nasir said price increases of goods and services have slowed down, there’s been a decrease in energy prices and wages are increasing at a higher rate than inflation – which means there is an increase in real wages after a squeeze of almost two years.

Andrea Calef, Lecturer in Economics at the University of East Anglia, said a more regionalised international trade means imports into the UK will likely not come from the cheapest producers, which partly explains why the UK has seen higher inflation rates than other countries in Europe.

She added: "Nonetheless, the long-term impact is uncertain. In fact, if well supported by policy makers, this situation may make domestic manufacturing sectors more competitive, increasing domestic production and, possibly, exports."