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fomc
1,978
No, that isn't what is in the testimony.
10
fomc
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So we don't have the same problem of change. I wouldn't object to that if--
17
fomc
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It strikes me that that would be a wiser choice.
11
fomc
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It is in the public record--in the policy record.
12
fomc
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There is something screwy between that alternative B and--oh, I see, one is current.
20
fomc
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It is in the policy record so the question is: Do we want to show an increase at this point? I don't feel strongly about it because I don't think it is one that is focused on. And I could certainly live with making that 7-1/2 to 10-1/2.
62
fomc
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The fact is that we can't do much about it if it comes through higher, so perhaps we ought to try to put it where it is likely to be.
32
fomc
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It is likely to be there only in the first few months and it is a long way for a year's operation. I am not sure that 7-1/2, 10-1/2, or 6-1/2--or whatever figure you want to pick--is adequate.
61
fomc
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Well, let's come back to that in a moment. Roger.
13
fomc
1,978
Mr. Chairman, I would have no problem with reestablishing the ranges at their current levels. I am attracted, however, by what has become almost a tradition with the Committee to continue to move these ranges to a lower level. And I would like to suggest, if that were the feeling within the Committee, that it could per...
161
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Bob Black.
3
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Mr. Chairman, my intellectual preference would be to go right down the line on alternative B. It would seem to me that the reduction in the limits on M3 would be a logical fallout of the updrift in interest rates we are likely to have if we continue our program of gradually lowering the aggregate targets in the long ru...
186
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Mark.
2
fomc
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Thank you, Mr. Chairman. May I ask a question before I make a comment? When you present the Committee's view on these long-range targets, do you envision making explicitly a statement to the effect that they're not being lowered but one of the reasons is because we intend to be more diligent in trying to actually come ...
74
fomc
1,978
I have already made that statement; I made it to the House Committee when they asked me. It seems to me that our policy should be to set ranges and to be within them. That is our purpose and I realize that if we stick with our current one that we do have to take some restraining measures to live within the M1 range. I ...
74
fomc
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But you would envision stating that principle publicly in connection with presenting these ranges? I think that is fairly critical because that is one of the few restraining influences on inflationary expectations that is left. I think that will be an important message and will come across importantly.
53
fomc
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Mark, if we want to be safe, to live within them I think Steve is right that we should raise the upper limit of M1. But the trouble with that is that it works against our purpose--to fight inflation.
46
fomc
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That is right. I agree with that. I would like to make just one comment on the credit thing. I agree that we ought to live within the law. I wonder if it would be worth considering the context in which we present whatever credit figures we present. We never use those in these discussions as targets. I don't know of a t...
127
fomc
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President Willes, we were tentatively thinking of suggesting that you use wording [such as]: "Given the ranges for M1, M2, and M3, the associated range for bank credit would be..." to give it that slight dimension of not quite the same importance.
56
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Mark, anything else? Thank you. Larry.
10
fomc
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Mr. Chairman, if we're going to make a strenuous effort to stay within the range and toward the midpoint of the range, there really isn't much difference between alternative B and alternative C. I would prefer alternative C just for one reason. I am not trying to be mechanistic and I know that a half point doesn't make...
254
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Bob Mayo.
3
fomc
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Mr. Chairman, thank you. I support your recommendation of 4 to 6-1/2 and the other ones that go with it on the current ranges, with 7-1/2 to 10-1/2 on bank credit. I think that is advisable. I don't feel that there should be any change in this [M1] range. I think our credibility is better served by our determination, w...
405
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Thank you, Bob. Ernie. Before you speak, I want to welcome Steve Gardner, who has come in. I will tell you, Steve, that we are right in the midst of setting the long-term ranges and we were being very imaginative by trying to keep them where they are--which I might add will be very tough in terms of the current outlook...
76
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Mr. Chairman, I came here with views very much like those Phil Coldwell has mentioned. But I agree that staying where we are--if we in fact do it--on the aggregates will probably give us a significant tightening of credit. The difference [relative to my view] will be very small, so I can ride with your proposal to keep...
77
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Thank you. Willis.
5
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Mr. Chairman, following upon Mark's question: Does [Congress] get you in any way into the short-term targets at the same time they are talking about the long-range targets?
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fomc
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We have not discussed the short-range targets and we do not plan to do so because they are not released until three days after the next meeting. So the only thing they might discuss is why we had the short-term ranges from the March meeting. I might get questions but we would not normally be volunteering in our testimo...
81
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It seems to me that that gets you quickly into Chuck's problem of suppose we have to very quickly--
21
fomc
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We have the Merrill case we have to worry about the same day; we may face it. In this go-around of testimony, we will not be addressing short-term ranges other than questions they might ask about the past.
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I concur with your [recommendation].
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fomc
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Yes, we would advocate staying with the current ranges.
11
fomc
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All right. Frank, did you have anything to add?
12
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No, I support your recommendation.
7
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Steve, did you have any suggestions? We're talking about staying with the current ranges. I'll make a comment in just a moment about the bank credit part of it.
33
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No, I don't have any difficulties [with that].
11
fomc
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I think every member has been consistent with this except perhaps Henry. I am not sure how strongly you felt about reducing M2 and M3. My suggestion, to recap, would be to stay with the current ranges for M1, M2, and M3. And from Phil's comment, which I think is a good one, we'd set the bank credit at 7-1/2 to 10-1/2. ...
101
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Yes, I can vote for that.
8
fomc
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Is there anyone who can't vote for that? Then we have a [unanimous] vote. Thank you very much. The next item of business is the continuing discussion of how we handle these quantitative expectations for real GNP, prices, and the unemployment rate, consistent with the long-run ranges for the monetary aggregates. We know...
437
fomc
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Mr. Chairman, I would continue exactly as you have done in the past. I think they will try to play us off against each other.
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I understand. Philip Jackson.
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I think that is the only answer. I believe that ultimately washes out when you get through with it. I do think it is possible in our testimony to give descriptive phrases rather than arithmetic ranges that would indicate the substance of the discussion of the Committee--that the economic activity might be a little slow...
148
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You'd rather me have that burden!
8
fomc
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I'd rather nobody do it, but considering the lesser of the evils, if I can put it that way, I think it certainly would be appropriate for you. If you feel that under the duties of your office you are going to be called on to make such [projections] you can be as extensively prepared and as meticulous as you wish to be ...
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John.
2
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I don't think there is any big advantage one way or the other. However, monetary policy is a consensus of the Federal Open Market Committee and, therefore, we would urge the consensus view--provided you use the name Balles rather than Williams if they ask you the name!
55
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Of course, we do on the monetary side have the vote of the Committee; and it is only on GNP and inflation numbers [that we do not]. Mark.
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I won't repeat anything I said in the letter; I would like to add two comments, if I may.
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I appreciated the letter; it was very helpful.
10
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Thank you. First of all, I think we are accountable to the public for what we do. And if there is some fundamental thinking behind the policy positions that we take, somehow it seems right to me to put that out in the public domain. Second, many members of this Committee already put out forecasts of one kind or another...
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Bob Mayo.
3
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Well, I disagree with Mark on his last statement. I find that we live in a political world. And what I am willing to say informally in a speech in Chicago I am willing to say because I know that I don't have to make any formal justification of that to the Congress of the United States. I think I can give better speeche...
149
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You all saw my last letter, I take it.
11
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This may be unfair for one of us to say, but I think this is perhaps one of the burdens of being Chairman of this Committee. Someone has to speak for the Committee and I think doing it--
41
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Somebody has to be available to go to jail!
11
fomc
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Well, sure. That's right. We have all been in that position in different parts of our life and no one has been to jail as far as I know.
33
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Thank you, Bob. Philip Coldwell.
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Mr. Chairman, I think I would support the idea for you to continue to give your private thoughts and views on this. The harder and more formal these become I think the more the Committee is going to be forced into a position on this. We may end up quibbling among ourselves and having outliers. In just the figures you h...
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Henry.
2
fomc
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I share Phil's views. I think it is not conducive to good policymaking to be put in a position of having this kind of forecast. It isn't quite clear to me whether it is a forecast or a target. Presumably, it would be the latter. I wouldn't want to have an unemployment target of 6 percent even though it might be my fore...
213
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Can I mention one other thing? I don't remember exactly what your figures were that you surfaced to the [Banking] Committee last time.
28
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They were consistent with this except on inflation, which was 6-1/2 percent.
19
fomc
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That was my recollection. That exactly portrays my point. These are going to have a track life of their own and you will have yourself in a ruler graph of the economy coming down the [pike].
42
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I feel comfortable in saying that I think inflation is worse now than it was three months ago and worse three months [ago] than it was before that. Your point is well taken. Paul.
39
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I feel quite clear in my mind, Mr. Chairman, that we don't want a Committee forecast as such. We don't want to try to get a consensus and say that this is the official position of the Federal Open Market Committee. We probably couldn't do it anyway. I do think there are some pluses and minuses in giving a kind of infor...
192
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We have twelve [differing views] on the outlook for the economy and a unanimous vote for monetary policy.
23
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I can imagine that happening. I don't want to project today. I could imagine some difference in the rate of growth a year from now that isn't reflected in a difference of opinion on what we should be doing today. I would think that might happen quite frequently, as a matter of fact. But anyway, I think the right compro...
146
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Dave.
2
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I would assume, Mr. Chairman, that if you felt that your testimony on the economy was way out of line with everybody else's view that you could put that in some kind of context.
38
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I will say that I will let you know each time what I am thinking. If you think it is way out of line, whistle. I don't think a quarter of a point is a big deal but if you really thought we [had big] differences I would like to debate it because I don't want to get at variance with a middle range.
70
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Well, with that kind of assumption, it seems to be perfectly reasonable to continue with your own views.
21
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I think I will bring you in on what I am thinking each time. That way you won't be surprised and you will have a chance to suggest, as Phil did, that maybe I ought to widen a range. It won't be locked up until we prepare the testimony, so I am open to arguments or even persuasion. Chuck.
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I think I agree with Paul that the formal expression ought to be a personal view but that informally you can certainly indicate the range of diversity in the Committee or a general consensus of the Committee [if our views are] not far different. The reason I think the formal expression should be personal is that I thin...
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Willis.
3
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Mr. Chairman, I think the statement you made earlier about your changed opinion in the last six weeks is essential, really, to a forecasting episode. The only way you can forecast successfully is to keep forecasting because the scenario changes on you and all of the underlying assumptions that you have made in the outl...
168
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Steve.
2
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I will put it very simply. When you testify you will, I am sure, indicate that you have discussed all these measures with the Committee and, therefore--
32
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And having listened, I've come to this personal judgment.
11
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Yes, that whatever you've come to, you have talked it over with the FOMC. Now, that doesn't indicate exactly how far you would go in saying three members disagreed on the low side and two members were very much [higher]. I wouldn't do that. That is terribly dangerous. We will all be testifying on our own forecasts. Hav...
105
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Thank you, Steve. Roger.
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I would feel fairly strongly that it should be your personal views. I don't think much can be accomplished by way of expressing a "corporate" view. You are not going to satisfy Chairman Reuss or those like him. The next step would be to ask to come into this room and then participate. I think a line has to be drawn and...
83
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Bones.
2
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I share, Mr. Chairman, the consensus that seems to be clear that the views expressed be yours. It would avoid the potential at least of having a Babel in the house.
36
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Frank.
2
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Mr. Chairman, I think if you can get away with the procedure you used last time of presenting your own personal view--and I like the idea of presenting a range rather than a point projection--fine.
42
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Really? I'll come back [to that].
9
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If you find that you can't, then I would be much less fearful than some of the others around here of the consequences of presenting to the Congress a consensus point of view and indicating that we have two members of the Committee who think it should be lower and three who think it should be higher. I think Arthur Burn...
192
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Point of order, Mr. Chairman!
8
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So I have always thought that this idea that we had to present a monolithic view and that any differences--this whole idea of playing one against the other--is gravely overdrawn. If it should happen that sometime the Congress invites all the members of the Committee for, say, two or three days of hearings to hear every...
82
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Only one Senator will show up!
7
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And he will be asleep!
6
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If they really push you hard, I don't think you need to fear horrendous consequences from displaying some diversity of viewpoints.
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I agree with that.
5
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With all the times we are invited to testify, maybe we better get the Presidents testifying more often so we can spend more time working at the Board. Well, Larry, you are entitled to a rebuttal if it is short. We are running out of time.
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I'll surprise everybody by agreeing totally with Frank. I think you exceed [what is necessary] if you go the whole way right at the beginning. There is no retracing your steps. I don't see any danger or any harm in ultimately being forced into having diverse points of view expressed, but I would let them drag you to th...
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Ernie, you are the last I believe. We have heard from everyone [else].
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Mr. Chairman, I have already expressed my view with respect to the procedure. With respect to the specific ranges, they are acceptable to me. My expectation is that the real economy and the price movement may both be a little stronger than [you indicated] but I wouldn't suggest that you change them.
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Mr. Chairman, I don't think we are making this decision forever anyway.
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I wanted a procedure with your permission. I don't hear anyone who is objecting to my making personal projections for the time being. I hear people who say they would be comfortable if [Congress] moves us more into [providing a consensus of] the Committee, but I see no pressure to do that. So with your permission, I'll...
109
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With regard to what you just stated, I would urge that in the testimony what is presented on behalf of the Committee be in subjective terms to describe the [various] things that the Congress proposes. It is only how specific you are in the ranges--
51