In the United States the Federal Reserve had long restricted its monetary action to stabilizing interest rates – the policy of William McChesney Martin. In this way the rise in costs and prices was financed almost automatically. With the policy shift instituted by Paul Volcker in 1979, the Fed focused on controlling the quantity of money.
For a short time administrative ceilings were also imposed on lending by Federal Reserve System member banks. Market interest rates soared. Inflation was curbed. The so-called monetarist counter-revolution, which blamed activist economic policy for destabilizing effects, sought to confine policymakers’ actions within the bounds of a set of “simple rules”.