> In the early 80s, the G7 economies tightened the money supply, raising interest rates dramatically, in an effort to bring inflation under control. This artic

> In the early 80s, the G7 economies tightened the money supply, raising interest rates dramatically, in an effort to bring inflation under control. This article points out a similarity between the early 80s and now. So I think it's appropriate to point out a major difference as well. Consider this chart[1] which shows both the short term interest rate (Federal Funds rate) and long term interest rate (10-year Treasury yield) since 1962. Before rates started rising in the late 70s, the market was used to an interest rate between 5-10% (both long and short term), after which it rose to 15% (long term) and 20% (short term). Compare this with the current situation. Markets now have been used to 0% short term interest rates and 2-3% long term interest rates for over 10 years. The little blip you see to the far right of the chart is how much interest rates have risen so far (to 0.83% short term and 2.85% long term). If such a tiny blip (historically speaking) is the cause of the current correction, then it seems reasonable to expect that this is only a tiny part of a much greater correction that comes if interest rates get even close to the levels seen in the start 80s. [1] https://fred.stlouisfed.org/graph/?g=PIsi https://fred.stlouisfed.org/graph/?g=PIsi