Volker took the Federal Funds rate up to 19% back in 1981. today the Federal Funds rate is 1.5%. What would happen to the economy if interest rates were raised 17.5 %?
Who would be the Paul Volker of today? Who has the courage to do what needs to be done regardless of how unpopular? If we have real inflation that's what will need to be done. There's nothing fun about 19% plus interest rates. Real inflation is painful.
PIP Paul Volker
Volcker took charge of the Fed in August 1979, when the U.S. economy was in the grip of runaway inflation. Consumer prices skyrocketed 13% in 1979 and then by the same pace again in 1980.
Working relentlessly to bring prices under control, Volcker raised the Fed’s benchmark interest rate from 11% to a record 20% by late 1980 to try to slow the economy’s growth and thereby shrink inflation.
Those high interest rates made it so expensive for people and companies to borrow that the economy weakened steadily. By January 1980, a recession had begun. It lasted six months. A deeper and more painful downturn took hold in July 1981. It endured for 18 months and sent unemployment up to 10.8% in November and December 1982, the highest level since the Great Depression.
https://apnews.com/d91989c6d267295f565fa4be7a825555They don't make them like Volker any more.
