The 1970s Economic Theory That Needs to Die

This belief dominates the journalist profession, not the economics profession

> Higher interest rates make it more expensive for consumers to buy a home or car and for businesses to make investments, which, in turn, is supposed to reduce hiring, blunt wage growth, and depress spending. The entire point is to cool prices by grinding the economy to a halt

That's a very consumer point of view and not relevant to the economy at large. Raising interest rates result in a smaller money supply than not raising interest rates. That in turn reduces inflation. This is Econ 101

> Volcker went down in history as the hero who saved the economy. The economics establishment drew a clear lesson: The cure for inflation is a recession

No, silly journalists drew that conclusion. Economists knew exactly why raising rates reduced inflation. This author is very confused