How will the financial crisis play out?

We are told that we are in the recovery phase, but massive fiscal deficits remain the order of the day in the UK in particular; there has been a large run-up in public debt; the banking sector remains largely unreformed and in the case of RBS still in difficulties. It remains unclear whether we are really only half-way through the crisis.

I found this Moneyweek interview with Bill Bonner fascinating. He argues the real crisis is still ahead of us and seems to be saying a deflationary crunch–a credit crunch worse than in 2008–will be followed by hyperinflation (probably as part of the policy panic response to the deflationary crunch). I think it is worth discussion. He believes real money, probably gold, and not issued by a central bank, will emerge from the ruins.

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