interest rates rose rapidly in the 1970 and early 1980. recall that the nominal interest rate is the sum of the real rate and inflation (i = r + 22/7). for much of the 1970, real rates were low, but inflation pushed up nominal rates. then, at the end of the decade, the Fed raised real rates to fight inflation. it took time for inflation to respond, so both real rates and inflation were high in the early 80s. the nominal rate on T-bills peaked at 14 percent in 1981