Sorry if that’s yes-no-maybe as an intro: if governments did the right thing (or only ever had one option) commentators could say, “Right – that’ll be the consequence”. Further, things would be much easier for all concerned if there was only ever one opinion from which to choose. And finally, in the real world there are economic, political and social factors to take into account alongside the purely fiscal considerations of the bean counters.

For example, if we take Britain’s current crisis (right up to the minute) then my opinion would go like this. Our currency is losing value, so it costs us more to import stuff. In the end, this pushes retail prices up – and there is inflation. Our central Bank (of England) printed money (via QE) last year to make business lending easier. This increases the amount of money in circulation, but makes each banknote worth less – and there is inflation.

Thanks to New Labour’s poolswinner approach to running up debt in recent years (and braindead bankers who had to be bailed out) our Government has no money left, and will now raise taxes and reduce expenditure to get rid of the debt. Ordinary people (taxpaying consumers with fewer freebies) will therefore have less to spend in shops – and there will be less demand and thus deflation. So perhaps all these factors cancel each other out, and we just sit tight until things get better. Except that if we do that, lots of people will become unemployed….and the Government (we must assume) will pay them benefits – making the debt worse – and the unemployed won’t spend either – and there will be deflation.

That makes the half-time score Inflation 2 Deflation 2. And what happens from here on depends entirely on government actions. My action would be to cut taxes and reduce welfare benefits even more – not because I’m a nasty wannabe millowner, but because I think we need to do three things at the same time: stop deflation, keep consumption up, and keep the debt down. Actually, we also need to do a fourth thing – tax breaks for young companies alongside higher taxes on big companies – but if we start getting into this now it will get even more horribly complex.

Ergo, if we think about what governments are most likely to do, we will know whether to expect inflation or deflation. And this is where it becomes well-nigh impossible to say what the bejesus will happen, for the simple reason that there are around forty reasonably-sized economies in the world….and they’re mostly at a different stage of the economic cycle to competitors – or make, do, grow and sell different things, or both.

Take the Chinese. They will (I think) keep their currency cheap to help exports, but slam the brakes on domestic consumption too hard – result, deflation. The UK will trim a middle course between tax and savings to try and keep everyone happy. Result: inflation. With the Greeks, Spain, Portugal and Italy all naughty members of the eurozone, they should really all have a different result….but they’ve only got one currency – result, chaos.

There is a logical theory which would suggest that once China is consuming fewer raw materials because of domestic recession and lack of export orders, Australia will go into reverse. And if the Chinese currency remains cheap and the Dollar strong, the US won’t be exporting much to anywhere (especially not to chaotic Europe) and so it too will get that double-dip everyone keeps talking about. The south Americans won’t have any markets for their stuff either, and the Russian Federation (based as it is on almost worthless collateral, and trying to sell energy to countries who don’t need any) will go bankrupt. And the EU will collapse in a Tsunami of international squabbling and internal strikes.

In such a world slump like that, there can only be one result: deflation. But as I’ve said before, guessing exactly when that will be is a mug’s game. And by then, other rather more pressing concerns – revolution, collapse of social order, opportunist imperialism and hedgerow contents – might be higher up the list of priorities.