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

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When interest rates are high and volatile, both money demand and velocity are likely to be shifting and volatile as well, as individuals and businesses adjust their behavior in response to changing economic conditions. The Fed might find it difficult to predict the velocity of money under these circumstances, making it harder to control the money supply and achieve macroeconomic objectives. In fact, during this period, the Fed was targeting the short-term interest rate as a way of influencing the broader economy.

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