Nassim Taleb, who wrote the book The Black Swan about unpredictable events, is worried about the role of the U.S. dollar in global finance.

It stems from Western sanctions that froze Russian assets after Vladimir Putin ordered the invasion of Ukraine in 2022. In an interview on Bloomberg TV on Friday, he called the move a “confiscation” and said it’s one of the top two biggest financial mistakes in the 21st century.

“It may make sense from a justice standpoint, but you’ve got to remember, it’s not going to encourage people to invest in the system,” Taleb warned.

The dollar remains dominant as a method of payment, and is used in 88% of foreign exchange transactions.

But its position as the top reserve currency has been eroded. While the trend has been going on for decades, with the greenback accounting for 58% today versus 71% in 2000, the sanctions on Russia sparked a rush to alternatives.

Gold in particular has been snapped up by central banks around the world as they look to diversify away from the dollar.

“So I’m really afraid of a progressive loss of the role of the dollar,” Taleb said, adding that “people nominally conduct transactions in dollars but they don’t store it in dollars, and that is what the problem is.”

This de-dollarization trend comes as the U.S. government is going deeper into debt, with interest expenses alone skyrocketing and worsening the budget deficit.

As federal spending continues to far outpace revenue, the Treasury Department must issued greater volumes of bonds, many of which are bought by foreign investors. But if they’re worried about the safety of dollar-denominated assets, will they keep financing U.S. debt?

“That’s exactly why I’m afraid,” Taleb added. “I’m afraid of what the current administration has done in 2022 when they confiscated assets. It doesn’t encourage people to invest in your currency.”

He said later, “That is harming the United States enormously.”

Taleb, who serves as distinguished scientific advisor at Mark Spitznagel’s Universa Investments, also warned markets are more fragile than they have been at any point in the last 20 to 30 years.

He cited the handful of tech giants that have driven the S&P 500’s rally on AI hopes. While AI in general could turn out to be a great investment opportunities, the companies that have been surging may not be the ones that represent the sector’s long-term growth, he explained.

The current environment is similar to what existed during previous collapses, Taleb said, pointing to complacency in the market is complacent and the earlier era of low rates that taught people to avoid conservative investments.

Now, valuations are “crazy” and built on a lot of hope, while the economy looks “very confusing” as data have been sending mixed signals lately.

Similarly, his colleague Spitznagel warned recently that the uninversion of the yield curve after years of being inverted, is the opening signal for big reversals down the line as a recession nears.

“That’s when you enter black swan territory,” he told Bloomberg TV last month. “Black swans always lurk, but now we’re in their territory.”