What was going on with those rates is that Volker committed the Fed to what was known as "the Monetarist experiment". That is, he was attempting to use the classical Monetarist approach of abandoning interest rate targeting, and target the monetary base instead. On the theory that in the long run inflation is always and everywhere a monetary phenomenon. The reason that interest rates were so high and erratic during that time was that the Monetarists were fundamentally wrong on how the monetary base works. They oversimplified to MV=PQ, where they assumed V and Q were constants. They are not. V is in fact not just variable, but in fact highly volatile. The erratic interest rates were the result of the fact that trying to hit a monetary base target really isn't connected to trying to hit an inflation target. Not in the short run at any rate.