Sky-High Interest Rates

Reaganomics and rapid money growth give Wall Street the jitters

Already orbiting at altitudes unimaginable a few short years ago, interest rates moved even higher last week and threatened to shoot the moon. The commercial bank prime lending rate rose to 19%, not far below the record 21.5% set in December. Rates for other financial instruments such as six-month Treasury bills were near record highs. By almost any measure, the cost of money, the lubricant for the U.S. economic engine, was high and heading higher.

There was no mystery about the sharp rises, at least...

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