re: #179 compound_Idaho

Inflation was >10% in 1980

Which was likely part of the reason for high interest rates. Paul Volker had raised interest rates in order to finally put an end to the high inflation that was damaging the economy. Raising interest rates for credit cards may have been part of that effort.

It should be noted that Volker’s actions were the primary reason why even after the oil shocks of the 70’s had faded the economy remained in recession till 1983. To be fair to both Carter and Reagan, they knew what Volker was doing and supported his doing it. But the realities of inflation fighting were not things either president could truly explain to the public. The high interest rates were like chemotherapy: Needed for longer term survival, but something that made short term life worse. But the president cannot say “I know these interest rates will ruin your small business, but they’re needed right now to ensure the nation’s long term prosperity.”