He also believes the world will flip flop between inflation and deflation fears for the next five to 10 years.

He says in New Zealand, the first quarter of 2010 was by no means the real world, and the country was not experiencing a V shaped recovery - it just looked like it.

Hunt believes the global credit crunch which all but disappeared at the end of last year is starting to come back, in the US, in Europe and even in New Zealand.

"New Zealand's banking system relies heavily on the wholesale money markets for marginal funding and a third of its liability is to wholesale money markets not to deposits."

He says wholesale money markets have become dysfunctional, asset markets are weak, lending growth is starting to slow down and there is more saving. At the same time incomes haven't changed and there is less retail spending.

Hunt believes there is already a double-dip in demand but not yet in production.

"What does worry me is that if companies are producing more but no-one is buying products, then warehouses will be full, which means production and employment will need to be cut and incomes will fall.

"Unless something is done to stop saving we will see a double dip by Christmas."

He says the silver lining is that a double dip should solve the inflation problem.

"I think the central banks will start to fear deflation and we will probably get quantitive easing for the second time."

He advises people to not get attached to any particular view of the economy.

Hunt says for the first three months of this year it paid to bet on the V shaped recovery and in the next three months it pays to bet on the double dip and deflation. He believes then there will be a policy response where central banks will start buying assets again to get asset prices up, to get the savings rate down and the global economy moving again.

"If they do that I suspect in a years time we'll end up worrying about inflation and we'll go through this cycle again - I think we're in for a lot of financial volatility and the world will flip flop between inflation and deflation fears for the next five to ten years."

Ultimately Hunt believes people have to save more and that will involve rebuilding balance sheets at the expense of consumption.