Jim, not an economist or historian are you? Not even a pseudo like an MBA -- free country -- you are free to flaunt you misinformation as you wish if you can bear the ridicule. I enjoy debating you, but feel it is terribly unfair since I know what I'm talking about. You have enough surface-credible facts to make the ignorascenti think you may be right. Interest rates in January 1981 were very high. They had been put there by Paul Volker, appointed by Carter who was fighting incipient world run away inflation boldly and with immense courage. Had he faltered, I believe (professional opinion) the world would have collapsed in runaway inflation. It was not an easy thing for Volker, or especially Carter to do to drive up interest and drive down employment as the 1980 election approached. Volker feared and Carter knew, as a politician, tha stopping inflation would cause recession and his defeat in the election. The war to stop inlation in 1979 to 81 was the boldest, most noble act of political economy in my lifetime. Eventually, Bush would dump Volker, and replace him with a man who profited from touting the Lincoln savings fraud.
Volker was attacked continually by contractors, builders, unions as he ground inflation from the economy during the 80's, and slowly, maybe too slowly, brought interest rates down. Interest rates had to be kept high because fiscal policy had been surrendered to the inflationists with tax cuts and military spending continuing but not accelerating the build up that started in the Carter years when policy toughened to stop USSR in Afghanistan-Bananastan. The imbalance between a very tight monetary policy (real interest rates reached 4-5% the largest in human history) because the expansionary fiscal policy pushed spending up and up.
Well, not time or interest in writing a book. The best scholarly and professional economist view is much closer to my view than to yours. Save your finger joints. Buy some books, read some documents, its all on the web and its free. Churn some numbers. But above all stop the chattering until you have made a study of the facts. Surviving a period is not enough to make you and expert on it.
Good luck in your learning.
Nihil |
