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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (239843)	12/13/2013 1:35:30 PM
From: Sam	Read Replies (1) \| Respond to of 542007

You don't think 13.5% interest rates was runaway interest rates? Good gosh, they were going straight up WITH NO END IN SIGHT. Oh for heavens sake, Steve, I don't have time for this, but--that was a DELIBERATE policy on the part of Volcker. He was raising rates in order to break the inflationary psychology that was beginning to set in. No end in sight? Not at the time, if you didn't understand what he was doing. But he did know what he was doing, and it worked just like the textbook he was reading said it would. That is the "cure" for increasing inflation--raise rates until the economy cries "Uncle". Or as they say in the oil patch, the cure for high rates is high rates, with the second "high rates" being high "real" rates--that is, rates must go up higher than inflation, in real terms, not merely shadow inflation. Reagan had nothing to do with lowering inflation.