Đó không phải là để nói sự khác biệt về tỷ lệ lãi suất tbat là không quan trọng, nhưng phần lớn có tầm quan trọng của họ nằm trong ảnh hưởng của tỷ giá hối đoái và điều đó phụ thuộc vào nhận thức của người tham gia. Có lần khi lãi suất tương đối dường như là một ảnh hưởng lớn, | Reagan s Imperial Circle 111 validity hinged on its being universally accepted therefore it was an all or none proposition. In a democracy that functions by compromise such propositions rarely prevail. In this case the chances of success were particularly poor because there was another major school of thought influencing government policy. Monetarists believed that the primary objective was to bring inflation under control and to that end the money supply must be strictly regulated. Instead of controlling short-term interest rates as it had done hitherto the Federal Reserve fixed targets for money supply and allowed the rate on federal funds to fluctuate freely. The Federal Reserve s new policy was introduced in October 1979 and interest rates were already at record levels when President Reagan took office. In his first budget he cut taxes and increased military spending simultaneously. Although a concerted effort was made to reduce domestic spending the savings were not large enough io offset the other two items. The path of least resistance led to a large budget deficit. Since the budget deficit had to be financed within the limits of strict money supply targets interest rates rose to unprecedented heights. Instead of economic expansion the conflict between fiscal and monetary policy brought on a severe recession. Unexpectedly high interest rates combined with a recession to precipitate the international debt crisis of 1982. Henry Kaufman had long warned that government deficits would drive other borrowers out of the He proved to be right but it was the foreign governments that were driven out first not the domestic users of credit. The Federal Reserve responded to the Mexican crisis of August 1982 by relaxing its grip on the money supply. The budget deficit was just beginning to accelerate. With the brakes released the economy took rdf and the recovery was as vigorous as the recession had been severe. It was aided by a spending spree by both the private
