The Credit Cycle’s Warning Signs — And Why Bitcoin Is Your Insurance Policy

Special Edition

Every major financial crisis in the last century has started in the credit markets — not in equities.

The 2008 Global Financial Crisis did not begin with stocks falling. It began with subprime mortgage delinquencies rising quietly in 2006, credit spreads widening through 2007, and the commercial paper market seizing up months before Lehman Brothers collapsed. By the time the S&P 500 began its descent, the credit cycle had already turned. The canary had been singing for over a year. Almost nobody was listening.

Credit is the circulatory system of the economy. When it flows freely, businesses expand, consumers spend, and asset prices rise. When it contracts, everything downstream — earnings, employment, equity valuations — follows with a lag. That lag is typically 3-6 months, which is exactly enough time for investors to convince themselves that “this time is different” before getting crushed.

Today, the credit cycle is flashing warning signs that veteran credit analysts have not seen sinc…