Money, being so close to our hearts, never seems ceases to elicit responses. It is in being aware of our experiences, our sharing of them that adds to the general knowldge. I believe that Pete's perception is the closest to my own and answers Ed W correctly. Additionally, the rate of interest drives the rate at which an economy must grow to remain solvent. Since so much of our asset base is mortgaged at ever decreasing length of contract, an increase in the interest rate places a higher burden on ALL the debt in the economy, it does not only inhibit new investment.
Demand loans are the first to be impacted.
The increase in interest rates to inhibit inflation has the exact opposite effect, since it increases the cost of operations that must be paid for out of higher prices. If the government authorizes something to be money, it's money. A dollar of bank credit and a paper dollar have identical value. I figured I had mad the difference clear. I'll try again.