We now know a little more about the global financial crisis from the terrible experience of 2008, and can trace its causes back to cheap credit after the dot-com crash of 2000 and a huge volume of bad lending in the US housing sector which spread like a cancer around the world by the securitization of mortgages.
Hedge funds have represented the apogee of leverage upon leverage, and a deleveraging world is the antithesis of an economic boom, an economic depression or super-severe recession if you prefer.
Governments have been slow to respond, and should have taken action to restrict credit growth years ago when house prices first soared to wild income multiples.
And what we have seen is a series of panic initiatives to stop a deflationary debt implosion by shoring up banks with massive injections of public money, as well as other ad hoc measures to prevent business collapses and stimulate consumer spending.
But the crisis response is too late to stop the impending economic slump, and it is obvious to even the most casual observer that creating more credit is no solution to a problem caused by too much credit in the system. It is a panic measure to head off the very worst of the slump but nothing more.
Indeed, the aftermath of the cure is likely to be almost as bad as the slump it is trying to prevent. The analogy of a person pulling a brick on a piece of elastic is sometimes used to explain how economic stimulus works: you pull and pull and nothing happens, and then suddenly the brick flies up and hits you in the face.
It will be the same with stimulus and bank bailout packages. At first the public and the banks will hoard each wad of cash that comes in their direction, refusing to spend or commit to new investments.
Then the economic cycle will begin to correct, and all that money will be released into the economy in a sudden burst, creating a sudden inflation. Central banks would have you believe that they can fine-tune their policy to eliminate inflation but experience suggests they will be no more successful than they were in preventing the kind of asset price meltdown we saw in 2008.
Actually inflation is probably what central banks would like to create as a means of rebalancing the global economy, most particularly by reducing the burden of debt now imperiling economic stability. The hard part is that once the inflation genie is out of the box it is tough to get it back in again.
That was the experience of the 1970s, and it could be many years before central banks feel confident that interest rates can be used aggressively to squeeze inflation out of the system.
In the meantime, investors will face another lost decade: Stocks will suffer from the impact of inflation on company profits as prices tend not to rise fast enough to fully offset rising costs; bonds will crash because inflation will wipe out their miserable yields and turn them negative in real terms; house prices may recover a little but higher interest rates will persist and discourage buyers.
The only winning asset classes in this environment are going to be cash, and by far and away the best performer will be precious metals.