schoumacher: fred schultz was vice-chairman of the fed board under volcker. the major change was a difference in how monetary policy was going to be carried out. before that, there had been an effort to try to have relatively slow interest rate changes. that clearly was not doing the job of controlling the economy in this kind of a very volatile inflationary environment that had appeared in 1979. and so, the change was to go to strict targeting on the money supply alone. the effect of that is, if you're not paying any attention to the price of money -- which is what interest rates are -- the effect of targeting entirely on the supply is that the price of money is going to change a good deal more. schoumacher: by the end of the year, interest rates began to rise, and rise dramatically. by february, the prime rate had reached a record 20%. among the first to feel the squeeze were small businessmen. we understand what the objective of the national government is, what the objective of the fed is, but we think that what can be a cure for the country's ills can be