In the late 1970s into the early 1980s, interest rates were high and very volatile. During this period:

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High and volatile interest rates tend to lead to shifts in both money demand and velocity, as individuals and firms adjust their spending and investment patterns in response to changes in borrowing costs. This can make it difficult for the Fed to accurately predict the velocity of money and adjust monetary policy accordingly. In fact, during this period, the Fed was targeting the short-term interest rate as a way to stabilize inflation and promote economic growth.

In the Late 1970s into the Early 1980s, Interest Rates