You are right about the runaway inflation. Had Volker not raised interest rates, we would have had inflation run away. Some farmers learned to play the inflation game a little too well and got caught when the rules of the game changed over night.

Buy land on high leverage, make one annual payment, next year use the newly inflated value of the land to purchase another farm on leverage and make one annual payment, repeat, repeat, repeat.

As long as inflation was causing land prices to raise and commodity prices along with it, inflated dollars that were easier to get (from higher crop prices down the road due to inflation) paid off the land. When the rules changed, those that leveraged higher than they could maintain in tougher conditions, were under water and many did not make it. Not much different than 2008 housing crisis but in the housing crisis the Fed stepped in and made interest cheap to make it easier to make the payments. Farmers in 80 got the opposite and nearly all loans then were variable rate.

The inflation game still works to this day. I paid of $875 land that is "worth" probably 2000 today after falling to about $300 in the 80's. I bought $575 land that is probably "worth" 1800 today. Corn was two bucks. I made the last payments with $7-8 corn. Paid the note off with cheaper dollars via inflation. The corn did not get worth more. The land did not get worth more. The money we use got worth less.

Which I could go off on variable rate vs fixed rate loans that we can get today, but that is subject for another thread.

Farmers - 80 - got crucified with interest rates. Home owners 2008 - got saved (some) by low interest rates. Credit booms lead to malinvestment and busts.

We are going down a different path this time. We will see where it leads.

John