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Politics : American Presidential Politics and foreign affairs
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To: TimF who wrote (40088)12/31/2009 3:52:22 AM
From: DuckTapeSunroof  Read Replies (3) of 71588
 
Re: [And would it have self-healed with Volker's much HIGHER INTEREST RATES in '80, '81?)] "The higher interest rates bought down the inflation, but in direct terms, would have increased the problem"

No, it would not have.

A) There was no particular 'problem' to begin with. (S&Ls were fine... boring and profitable as per usual for the post war period.)

And, as you well know (or at least you should know):

B) a steep interest rate curve (major 'contango' in the credit markets, to use the industry's terminology) INCREASES depositary institutions profits, not the other way around.
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