In 1979–1980, the state of the American economy was even more dire than during the 2007–2008 financial crisis, and the markets also exhibited higher volatility. Below are charts reflecting fluctuations in interest rates and gold prices up to 1940. As you can see, nothing similar to what happened before 1979–1982 occurred.

This was one of the turning points of the century. The political pendulum swung to the right worldwide, and Margaret Thatcher, Ronald Reagan, and Helmut Kohl came to power. The definition of "liberal" ceased to mean "progressive" and took on a new meaning—"paying people so they don't work." In my understanding, the Federal Reserve found itself between a hammer and an anvil. The central bank had to either a) start printing money to solve debt problems and support the economy (despite inflation already reaching 10% in 1981, which caused stock traders to sell bonds and shift into inflation-hedged assets), or b) attempt to curb inflation with unprecedented tightening measures (which would have been fatal for debtors, as the debt level was at its highest since the Great Depression). The situation worsened due to rising inflation rates and a similar decline in economic activity. Both indicators reached critical levels. The debt level continued to grow faster than income needed by borrowers to repay their debts, and American banks were issuing huge loans—much more than their own capital—to developing countries. In March 1981, I wrote an article for the Daily Observation newsletter titled "Waiting for the Next Depression," which ended with the words: "Judging by the size of the loans we have issued, the next depression will be comparable to or worse than the one we saw in the 1930s."