According to this ingenious analysis, the household deleveraging that is observed at the end of a credit super cycle is not a brief affair. In fact, the deleveraging process that is already under way should last for at least a decade.

It is very important for policymakers and investors to understand that this long, deep debt-deflation recession is very different to the brief, shallow inventory-cycle recessions that we have all experienced since World War II. Very few people are still alive today who have a living memory of the last similar economic event: the Great Depression that began in 1929.