Thank you, I briefly touched on that but your detail is very helpful.
Yeah I find it hard to believe that anyone who was paying attention in the late ‘70s early ‘80s could fail to remember how choking off credit and raising interest rates through the roof broke the back of inflation.
IIRC the problem with the Carter gang is that they failed to choke off credit growth. State chartered financial firms were outside of the Fed’s regulatory power and they continued to expand the money supply. The ‘bond vigilantes’ would watch the weekly Fed reports on the money supply numbers and they would kill bond prices every time they went up. I think that Volcker was able to get state chartered banks covered by the Fed in order to prevent them from defeating the Fed’s attempt to reign in M1. But it’s been awhile and I’m working off memory on the details.
Rates right now are ridiculously low. Savers have been punished for almost 16 years. If the Fed doesn’t raise rates they won’t have a good way to fight the next deflation/recession that comes down the road.