People are not rational actors, but rationalizers, and the math behind financial systems is a great excercise in justifying short-term interests over long-term inhabitability of the planet.  It basically tells people what they want to hear, given our inherent bias towards present rewards.  

Has anyone looked at Richard Douthwaite's work on the issue of responding to inflation from resource constraints by raising interest rates and how damaging that would be?

A quote: "Central bankers must therefore recognise that higher energy prices are necessary to enable the energy companies to develop more expensive sources of fuel, and that, consequently, they must allow the inflation to take its course. They must not choke it off by preventing the higher energy prices being reflected in the prices charged for the goods and services which use fossil energy. Inflation is the only relatively painless way that every price in the global economy can change by a different amount to reflect the new energy price level. The inflation needs to proceed for several years as, initially, firms will put prices up by only the amount their direct fuel costs rise. They will consequently require further increases later when the higher cost of the fuel used in the products they purchase works its way through to them and has to be passed on. Resisting inflation would essentially be an attempt to maintain the purchasing power of money in terms of the amount of energy it buys. This is obviously an inappropriate response if energy is getting scarcer and/or requires more resources to produce."

Source:  http://www.feasta.org/documents/energy/November2005.htm