"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output."
Milton Friedman
Volker limited the money supply, and then the money markets created 21% interest rates on mortgages (this is long before 0% mortages with cash at closing scam that excess money created a crash.
21% payouts on CDs held in banks.... lot of older folks here will remember that. Banks had to PAY US for the money we put in there. Not how they do now and get member Fed Reserve banks to ship them money at 0% and then force us to pay 3 to 4 %.
Because if the money in circulation was left to the real world there would be NO way for these bank hucksters to PRINT electronically all this money. IT IS THEIR FAULT we are where we are.
Suffice to say 21% interest did put a stymie on business productivity, but for savers... people who save their cash— it was fantastic to ladder the instruments. 10K at a time at 21% payout is better than Vegas modest wins.
Nonsense. I recall quite clearly seeing the monthly inflation rate fall to zero sometime in 1982 or 1983. This was utterly astounding given that it was at over 8% just 2.5 years earlier. Yes, Volcker did a lot of that, with backing from Reagan.
Amazing that anyone could be as ignorant as the author of this piece.
There was no economic growth occurring during the ‘70s stagflation, which is exactly why the Phillips Curve was discredited then. It predicted that the rampant inflation would be accompanied by growth, not stagnation.
Anyway Reagan understood and supported what Volcker was doing to choke off inflation. It was the prescription promoted by Milton Friedman and the Monetarist School. Stop the growth of the money supply long enough to break the inflationary cycle, and don’t allow credit growth in excess of the economy.