Source stringclasses 1
value | Date int64 1.98k 2.01k | Text stringlengths 2 27.1k | Token_count int64 1 5.57k |
|---|---|---|---|
fomc | 1,977 | Well, let's move on to your comments, Mr. Axilrod. | 15 |
fomc | 1,977 | [Secretary's note: This statement was not found in Committee records.] | 14 |
fomc | 1,977 | A rather incisive set of comments. Any questions? Yes, Mr. Coldwell. | 18 |
fomc | 1,977 | Mr. Axilrod, did I hear you say that the model had stopped overpredicting for the third quarter? | 24 |
fomc | 1,977 | Yes, in the third quarter. That's on the assumption that the rate of growth in M1 in the third quarter is about 8-1/2 percent. | 33 |
fomc | 1,977 | That's the first quarter, but it has no reflection-- | 11 |
fomc | 1,977 | Well, in the second quarter it's very small. It sort of phases down. In fact, I had written out during the second and third quarters because it was very small in the second quarter, but I wanted to be absolutely precise and write in the third quarter. But it's sort of phasing down [unintelligible]. | 66 |
fomc | 1,977 | My question was, how will you know? The third quarter isn't over yet. Well, even if there is no growth, it's going to be very difficult to avoid a very large growth rate in the third quarter. But essentially the second quarter has a very small overprediction, 3/10 percent on the level. | 64 |
fomc | 1,977 | Does this overpredict on what basis? | 8 |
fomc | 1,977 | Given the GNP and the actual interest rates. | 10 |
fomc | 1,977 | Does that involve a shortfall for some previous period, and-- | 13 |
fomc | 1,977 | Oh yes, there has been a consistent shortfall. The percentage error--by the fourth quarter of '76, it was almost 12 percent off, that is, it had overpredicted--its predicted M1 is 12 percent higher than we actually attained. And by the first quarter, it was up to 13.3, and then by the second quarter it phased down to 1... | 103 |
fomc | 1,977 | In other words, it stabilized, but has not made up-- | 13 |
fomc | 1,977 | Oh, no, no, nowhere near, and we're assuming--actually, in all projections we present to the Committee--we are assuming further shortfalls. We are nowhere near staying with this model. We assume further shortfalls. | 46 |
fomc | 1,977 | When you say prediction of M1 by the model, this is over what period? How do you define the word prediction? | 25 |
fomc | 1,977 | Well, this quarter-- | 5 |
fomc | 1,977 | Where we are, or over what period? | 9 |
fomc | 1,977 | Well, this shortfall I'm measuring is from around the third quarter of '74, where we started-- | 21 |
fomc | 1,977 | I see. | 3 |
fomc | 1,977 | --going off. It's been rather consistently going off since then. | 13 |
fomc | 1,977 | Mr. Chairman, may I ask a question? Don't we have the ability to control the growth of M1, especially if we are willing to let fed funds rates and interest rates rise? Do we predict these things, or do we control them? | 50 |
fomc | 1,977 | Well, I think, President Roos, that the Committee could, if it wished, control within plus or minus 1 percentage point, or 1-1/2, something like that, over a year or so, the rate of growth in M1 if it were willing to see whatever interest rate behavior developed, to see whatever M2 and M3 behavior developed as a result... | 97 |
fomc | 1,977 | Does your model tell you what would have happened, for instance, to the funds rate had you tried to hold M1 on target? | 27 |
fomc | 1,977 | In this period, oh sure. Yes, you would have to work backward, but it's essentially the bill rate that's in the equation. But the model is still saying that, for the money supply growth, it's the Committee's target. You would have a substantially higher Treasury bill rate than you see in the Bluebook. That is the data ... | 85 |
fomc | 1,977 | May I ask one other question, Steve? You made a comment here about the implicit velocity of M1 in the fourth quarter of the year, that it would have to be [growing] 4 to 8 percent-- | 46 |
fomc | 1,977 | 6 to 8. | 5 |
fomc | 1,977 | --6 to 8 percent, and that is grounded on an assumption of what? | 17 |
fomc | 1,977 | That assumes that if the Committee would obtain a 4 percent rate of growth in M1 in the fourth, first and second quarters, which would be consistent with obtaining the midpoint of that 4 to 6-1/2 percent, then on average the velocity would be about 7 percent, given the staff's GNP forecast for that period. | 71 |
fomc | 1,977 | The assumption also includes the GNP forecast. | 9 |
fomc | 1,977 | Yes indeed. And if that, of course, is lower, then you would have much less demand for money and much less pressure on interest rates. | 30 |
fomc | 1,977 | It's true that would have followed a low-velocity quarter, the current quarter. | 16 |
fomc | 1,977 | Yes, that's right. When interest rates were up. | 11 |
fomc | 1,977 | And the average for the year would be lessened. | 11 |
fomc | 1,977 | Any other questions? Yes, Mr. Wallich. | 11 |
fomc | 1,977 | What are the prospects for significant disintermediation for the thrifts and for bank time and savings deposits. | 22 |
fomc | 1,977 | Well, we've been surprised two ways by the behavior of thrift flows. We were surprised that they were relatively low in April and May. We were surprised that they were relatively high in June and July. Now our data for August is suggesting, at least for banks, another slowdown in flows. You may want to keep that backgr... | 278 |
fomc | 1,977 | This 7 percent inflow to the thrifts--compared to what? It's been coming in around 12. | 24 |
fomc | 1,977 | In the second quarter, it was running around 11, and recently it picked up, and so we are projecting a third quarter--with some little slowdown from the recent pickup--on the order of 13 percent. This would be a sharp drop. It would be a material reduction from where you are now because of this bill rate moving up. Tha... | 74 |
fomc | 1,977 | As I recall, in the fourth quarter of '76 it was up in the 18 range. | 20 |
fomc | 1,977 | It was very high. | 5 |
fomc | 1,977 | Mr. Guffey, please. | 8 |
fomc | 1,977 | Yes, Mr. Chairman. Steve, do you have any information of what's happening to these wild-card renewals, and are they in your projections for the rest of 1977? | 37 |
fomc | 1,977 | Well, we've taken account of them. We don't have any information that there are substantial difficulties, and of course they are in the over-four-year area, where we still have rather considerable room, and we don't expect those [to make] for much of a problem. | 54 |
fomc | 1,977 | Mr. Chairman, a question. Maybe it's better directed to Peter. Where is the commercial paper rate after this series of moves to 6 percent? | 30 |
fomc | 1,977 | Well, that has moved up not quite as much as federal funds. I think they're in about the 5-5/8, 3/4 area now. It perhaps hasn't made a full adjustment to the 6 percent federal funds rate. | 50 |
fomc | 1,977 | If there were no change in formula, would this make the change in Citibank prime? | 19 |
fomc | 1,977 | I think it would, within about another two weeks. | 11 |
fomc | 1,977 | Wait a minute. In three weeks. | 8 |
fomc | 1,977 | Three weeks. | 3 |
fomc | 1,977 | It's got to run through the full moving average. | 10 |
fomc | 1,977 | Because of a three-week moving average. | 8 |
fomc | 1,977 | Mr. Chairman, [this is a] rather detailed [point], I guess--I noticed in the recent report of weekly reporting banks that deposits of foreign banks in U.S. banks are up about $1.6 billion, $1.7 billion from a year ago. Now, is it correct that those deposits run into the money stock numbers? | 71 |
fomc | 1,977 | That's correct. | 3 |
fomc | 1,977 | And is there any basis for expecting that kind of growth in that type of deposit to continue, or that what we have seen in the past year is a temporary phenomenon? | 34 |
fomc | 1,977 | Well, there was an increase in two weeks in July, and we believe that will be coming out. That was a temporary increase and not one we expect to continue. In fact, we expect it to be coming out, and the fragmentary data we have, I am told, suggest that it is coming out, and I am not exactly sure of my number, but I thi... | 178 |
fomc | 1,977 | Is there any likelihood that that would be affected by a change in relative interest rates? | 17 |
fomc | 1,977 | We were not able to come up with any explanation that was satisfactory of why those foreign deposits went up in that middle week of July and stayed up in the next week. | 34 |
fomc | 1,977 | At least I'm not aware of a satisfactory explanation. | 10 |
fomc | 1,977 | Yes, Mr. Mayo. | 6 |
fomc | 1,977 | Mr. Chairman, I am bothered here about something else in terms of our yardsticks. We have again an illustration in July of a huge increase, way beyond what we expected. Some people may say, well there's the Fed with its seasonal adjustment factors again, and yet it's pretty obvious, in answer to that, that, well, forge... | 243 |
fomc | 1,977 | Don't underestimate us. | 4 |
fomc | 1,977 | Well, what I am saying is, I am trying to maybe even take refuge in looking more at unadjusted numbers than we had before, and not that I lack any confidence in staff to do the best job they can in seasonal adjustment, but it may be that we are dealing in an area were the unadjusted numbers over a period time can be an... | 115 |
fomc | 1,977 | You are indeed suggesting a revolution. I don't think we want a substitution, but I do think we want and need at least a partial addition. I find it very disconcerting--when, at times, I ask one or another member of our economic staff [about] the recent behavior of unadjusted figures, that seems to shock the individual... | 195 |
fomc | 1,977 | No, I mean let's get rid of some other numbers--it sounds like a budget director--let's get rid of some other numbers that maybe aren't as valuable. I don't mean a literal substitution of unadjusted for adjusted. That would be a mistake. We are entitled to our best evaluation of the seasonal. But if I may take one more... | 198 |
fomc | 1,977 | President Mayo, I think there might be a misunderstanding of how we make the projections. The projections for the period between Committee meetings--well, we have a variety of projections, and models, and what have you. But the basic judgmental projection--sometimes that's adjusted on the basis of the model results--bu... | 76 |
fomc | 1,977 | Oh, I understand that, Steve. | 8 |
fomc | 1,977 | And, in judging whether the data coming in are above or below paths that seem consistent with what the Committee finally adopts for an intermeeting period, that judgment is based on the unadjusted data that's coming in. And the seasonal factor is a constant, and that's just the transformation that transforms it into a ... | 117 |
fomc | 1,977 | Well, I understand that, and I guess I'm just asking for a further sharing of that base so that the Committee judgment as well as staff judgment has a greater input on the unadjusted figure. | 40 |
fomc | 1,977 | Mr. Chairman, if I could piggyback on Bob's comments here. I think he has a very useful idea, as a matter of fact. He has referred to some of his experiences as budget director. I recall a time when I was responsible for establishing and maintaining a tracking and monitoring system for all kinds of loan and deposit com... | 206 |
fomc | 1,977 | Well, I think Mr. Mayo's comment on seasonal adjustments is very useful, and at the risk of complicating life, let me point out another, perhaps even more serious, difficulty. And this time I will be using seasonally adjusted figures, and this difficulty will extend equally well, I'm sure, to figures that have not been... | 285 |
fomc | 1,977 | Yes, its quarterly average, I believe. | 9 |
fomc | 1,977 | '76 or '77? | 6 |
fomc | 1,977 | No, '76--2.9, and the redefined M1 is 9.2. You are living in a different world. Now let me take the first quarter of 1977. The current M1 is 4.2, and the redefined M1 is 8.9. Again, a very different world. Now, for the second quarter this year, the difference is very much smaller: 8.4 for the current M1, and 8.7 for th... | 261 |
fomc | 1,977 | Excuse me, Mr. Chairman, do we have data on what happens to the calculation of velocity using the money stock as you redefined it here? | 31 |
fomc | 1,977 | Well, I don't have these calculations, but the velocity figures would be cut back very sharply. | 19 |
fomc | 1,977 | So that the miracle of the inconsistencies in that area might be reduced by this redefinition. | 19 |
fomc | 1,977 | Oh, no question about it. | 7 |
fomc | 1,977 | But it's mainly just a question of adding in some of the items into which substitution has occurred. | 19 |
fomc | 1,977 | That's exactly-- | 3 |
fomc | 1,977 | You're taking 100 percent of that. People wouldn't have thought you ought to take 100 percent because there were probably also some diversions in the market into those points? | 34 |
fomc | 1,977 | Well, whatever you do in this area I think will have an arbitrary element. Take demand deposits. Demand deposits can be active or stagnant, and sometimes they'll be the one, sometimes the other. And these are difficulties that are inherent in the kind of complex monetary system that we have and human behavior being wha... | 94 |
fomc | 1,977 | Might I ask, Mr. Chairman, what did M1 do on an unadjusted basis in July? Do you know, Steve? | 29 |
fomc | 1,977 | I don't have that. | 5 |
fomc | 1,977 | That was a nasty question. | 6 |
fomc | 1,977 | I thought for sure he would have the figures. | 10 |
fomc | 1,977 | I bet it went up a great deal. But the question of-- | 14 |
fomc | 1,977 | I think it did, too-- | 7 |
fomc | 1,977 | It either went up more than expected or went down less. | 12 |
fomc | 1,977 | My comment is not meant that you can explain all of the difference in M1 in that one month. It's probably only a small amount. It's a question of being unable to sort out the apples and oranges. We get a bale of fruit--a box of fruit; here I'm getting all mixed up with my metaphors. | 65 |
fomc | 1,977 | Well, gentlemen, any other general observations? If not, we'd better turn to our monetary policy discussion, looking toward a new domestic policy directive to the New York Desk. I think that it would be useful if--this remark is addressed totally to the Bank Presidents at the table and their alternates--it would be use... | 296 |
fomc | 1,977 | Mr. Chairman, you have just destroyed my whole thesis--what I was just planning to spring on you--of lowering the lower end of the M1 and M2 ranges. | 36 |
fomc | 1,977 | Well, I haven't destroyed it. I haven't destroyed your thesis. | 13 |
fomc | 1,977 | I approached it a little different. | 7 |
fomc | 1,977 | I've reinforced your thesis, reading your mind as I am capable of doing-- | 15 |
fomc | 1,977 | Yes, I understand. Well, let me make a couple of comments first. From my perspective, the planning horizon for policy using the aggregates must be down the road apiece, and I look for early '78 as my target area, in that the job of the Committee today and over the next couple of periods is to position itself for what i... | 249 |
fomc | 1,977 | Let me just stop you there to ask a question. I would not want to publish a negative figure. I would welcome a negative figure if it just developed naturally. | 33 |
fomc | 1,977 | I'm talking about publications. | 5 |
fomc | 1,977 | Well, that's what I wanted to clarify. | 9 |
fomc | 1,977 | On the federal funds rate, I am disturbed about this concentration and limitation on the range. And I would hope if we are going to look at these widened ranges of M1 and M2 that we would also widen the range on the federal funds rate, and I would suggest to the Committee a 5-1/2 to 6-1/2 rate, which centers upon where... | 105 |
fomc | 1,977 | May I just say I don't think that that recommendation is consistent with your recommendation on lowering the limits for M1. The reason for lowering the lower limit [on money] is not to tap lower interest rates very quickly. But if you permit the lower limit [of the federal funds rate] to go down to 5-1/2, you may be fo... | 77 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.