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value | Date int64 1.98k 2.01k | Text stringlengths 2 27.1k | Token_count int64 1 5.57k |
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fomc | 1,998 | President Stern. | 3 |
fomc | 1,998 | Thank you, Mr. Chairman. I certainly favor earlier release of the minutes and clarifying the language with regard to the tilt or the lack thereof. Like Bob Parry, I have a mild preference for something like Option 2, but there doesn't seem to be a huge difference between the two versions as I read them. I share Ed Boeh... | 169 |
fomc | 1,998 | Governor Ferguson. | 3 |
fomc | 1,998 | I am with what seems to be the growing majority here, but I recognize that there are counter arguments. I'm in favor of immediately releasing the tilt mainly because it's a question of honesty. If a consensus has emerged in the Committee that says the risks have moved in a certain direction and therefore policy may fol... | 225 |
fomc | 1,998 | President Poole. | 4 |
fomc | 1,998 | I, too, like Option 1, but I would prefer the tilt language from Option 2. I think that the earliest possible release of the minutes, consistent with their being written clearly and informatively, is a good idea. I would like to add that I cannot imagine a better time to introduce these new procedures than right now, g... | 77 |
fomc | 1,998 | Governor Gramlich. | 4 |
fomc | 1,998 | Thank you, Mr. Chairman. First, I am for releasing the tilt sentence or the entire directive paragraph promptly after the meeting and the minutes as soon as possible thereafter. On the language of the directive paragraph, I am for Option 1. Let me point out one difference between Option 1 and Option 2; Option 1 states ... | 388 |
fomc | 1,998 | Vice Chair. | 3 |
fomc | 1,998 | Mr. Chairman, I think it might be worth thinking about why we do what we do before we change it. One of the realities is that by releasing the minutes of a meeting two days after the following meeting, the decision on the tilt at the earlier meeting may be interesting but it is no longer very important. We already have... | 716 |
fomc | 1,998 | President Moskow. | 4 |
fomc | 1,998 | Mr. Chairman, I tend to agree with President Boehne and also President McDonough. It is hard to argue against transparency. Obviously, we all want to release as much information as possible. But if we were to design this system from the start, I cannot imagine that we would design a system that would require us to make... | 349 |
fomc | 1,998 | President Jordan. | 3 |
fomc | 1,998 | Thank you. With regard to the minutes, I agree with releasing them as soon they can be prepared, even though releasing them sooner will impose some burden on the staff and on all of us who review and approve them. On the release of the tilt, though, I am persuaded by a number of comments today that if we release it imm... | 379 |
fomc | 1,998 | Governor Kelley. | 3 |
fomc | 1,998 | Mr. Chairman, when we discussed this issue earlier, I spoke at some length against the idea of early release and I still feel the same. I would like to restate my views briefly, if I may, even though most of my concerns already have been expressed. First of all, please recall that the Lindsey paper that supported our e... | 568 |
fomc | 1,998 | One of the things that strikes me about this discussion, and I must admit that I am on both sides of this issue, is that I switch back and forth to different sides at different times. The reason is that we are being pressed on something that we consider to be of value to the market, namely that more information is bett... | 442 |
fomc | 1,998 | Americana. | 3 |
fomc | 1,998 | There does seem to be a fairly broad consensus about the desirability of better and simpler language. However, we have not yet come together on some of the other issues; if a vote were taken on those issues, I think there would be a majority in favor of doing something now, but there is still a significant minority on ... | 733 |
fomc | 1,998 | Thank you, Mr. Chairman. I will be referring to the usual package of colored charts with an FOMC cover and also to three pages of black and white charts showing standard deviation data that I will refer to briefly. Those two sets of charts should be in front of you. 1/ Looking at the first page of 3-month deposit rates... | 1,372 |
fomc | 1,998 | This is the U.K. bank rate versus sterling? | 11 |
fomc | 1,998 | Yes. | 2 |
fomc | 1,998 | What maturity? | 3 |
fomc | 1,998 | The 10-year maturity. So, we have a 10-year gilt. It is a 10-year swap among the prime bank names, not necessarily British banks; it involves the major players in all the markets. | 44 |
fomc | 1,998 | But in sterling? | 4 |
fomc | 1,998 | Yes, in sterling. It is that spread we are looking at as it widens out and becomes more volatile. I don't need to go through all the data, but you can see essentially the same for the U.S. 10-year spread and the JP Morgan emerging market bond index. My point is to underscore that the shock to fixed-income markets that ... | 385 |
fomc | 1,998 | Some did! | 3 |
fomc | 1,998 | And some did. Finally, Mr. Chairman, in the chart on the last page relating to our open market operations, you can see that fed funds generally have traded uneventfully since your last meeting. We did purchase $7.9 billion on an outright basis, and we will have to make more such purchases because reserve needs have bee... | 532 |
fomc | 1,998 | Peter, I think we are all aware that a major trauma in world financial markets occurred when the Russian devaluation and debt moratorium were announced. Since the size of the Russian economy is de minimis relative to the rest of the world, something fundamentally different was going on. There are two, not necessarily c... | 319 |
fomc | 1,998 | I would fall in your third category, and I'm glad you offered that option to me. As you described it, Mr. Chairman, there was some sense of stabilization or calming in late July when extreme movements in the Bradys and other securities seemed to moderate. I think there was a hope at the time that the IMF program for Ru... | 359 |
fomc | 1,998 | Also, the asset values are essentially a psychological evaluation of expected future earnings. If expectations change in the direction of weaker earnings, wealth declines. It is not a zero sum game. | 36 |
fomc | 1,998 | Absolutely. | 2 |
fomc | 1,998 | Financial intermediaries can create money; they also can "uncreate" money. | 16 |
fomc | 1,998 | Financial wealth can be destroyed. Obviously, other people probably have views on this very important question that you raised. | 22 |
fomc | 1,998 | May I hazard an observation? I think one lesson the market learned from Russia is that if there was any country the G-7 wanted to keep from going into free fall, it was Russia because of the potential geo-political consequences. I believe there is a general view that Russian behavior at the official level was so awful ... | 174 |
fomc | 1,998 | That is called sovereignty. | 5 |
fomc | 1,998 | Yes. | 2 |
fomc | 1,998 | President Minehan. | 4 |
fomc | 1,998 | On the Russian situation, at least as regards people in the First District, I believe their concern related more to the lack of a clear bailout in July, though I think opinions have changed about whether that was a good or a bad thing. Obviously, people have responded to the new stories and the rumors that the last tra... | 204 |
fomc | 1,998 | I think one has to think of that in terms of the issuers or borrowers of debt. That is, the role of the financial sector is to take on the financing requirements of people actually building factories and the like. So, the other side may be those who issued bonds and built factories and did so by borrowing on BBB or wor... | 72 |
fomc | 1,998 | And they are paying off those loans now? | 9 |
fomc | 1,998 | The borrowers made money. They borrowed at a good rate and they built nice factories umpteen months ago. So, as I see it such borrowers involve a fair number of those on the other side of these trades. It is not a zero sum outcome within the financial sector in that sense. | 58 |
fomc | 1,998 | Some of it may well be. | 7 |
fomc | 1,998 | Yes, some people in the financial community undoubtedly are making money on the other side. | 17 |
fomc | 1,998 | These gains and losses used to be related to trade and now they seem to be associated mostly with speculation. | 21 |
fomc | 1,998 | They never involved trade! Seriously, Peter did not mention the fact that the Federal Reserve Bank of New York is going to release its turnover survey today. If we go back and look at the first such survey many years ago, we find almost precisely the same low number, namely something like 10 percent or 15 percent of al... | 144 |
fomc | 1,998 | Cathy, clearly there are trades where people on different sides make money. | 15 |
fomc | 1,998 | Somebody is benefiting from these lower yields. | 9 |
fomc | 1,998 | I think it's important to understand the degree of grossing up of the nation's balance sheet. That is, a fully consolidated balance sheet of the United States would on the asset side have our gold stock and our net physical property accounts plus net claims against foreigners; on the claims side all we have is equity. ... | 243 |
fomc | 1,998 | Yes, I agree with your analysis, though my point to Cathy Minehan was more limited, namely that initially we have to be careful to separate the financial sector from those who borrow. We might call it the real sector for the moment. If we have had years and years of IPOs and junk bond financing, the real sector has alr... | 129 |
fomc | 1,998 | We had some $15 trillion in equities issued in the United States, the market value as of say last June, and we have lost $3 or $4 trillion of that value. That is not a zero sum game. It has to appear somewhere as somebody's losses. It may be a reduction in pension fund values or a loss by a bank that has made a loan to... | 143 |
fomc | 1,998 | I do not disagree with the nonzero sums. My point is that at some level somebody has benefited from all this. | 24 |
fomc | 1,998 | Yes, there are a lot of winners. | 9 |
fomc | 1,998 | The other question I wanted to ask relates to the sharp rise in volatilities. With regard to volatilities in the stock market, we have concluded on the basis of some of the work we have been doing on mutual funds over the last two or three years that until recently volatilities had been lower rather than higher than no... | 117 |
fomc | 1,998 | I'm not sure what data you are working with. I gather your study was historical. | 17 |
fomc | 1,998 | Yes, very long term. Our sense was that until very recently volatilities, in stock markets in particular, had not been what they were, let's say, 10 years ago. | 38 |
fomc | 1,998 | On an historical basis, working from the data in my head, I think that is right. I have not compared the July 1 to September 15 period with other periods. What I was showing you was implied volatility on equity and bond futures, which moved up sharply from levels in prior months. Again, I do not know precisely what an ... | 74 |
fomc | 1,998 | This level of volatility is not necessarily important in terms of its immediate economic consequences, but I wanted to understand what the relationships were. | 26 |
fomc | 1,998 | My impression of most of the work that has been done on this subject over a long period of time is that volatility has not shown much trend in markets that are well developed. Of course, we may have episodes of high volatility and that is what Peter has pointed out. This is an episode in which we observe an extreme set... | 95 |
fomc | 1,998 | I wasn't making a remark so much about trend as about what we have been observing over the last three or four years in particular. | 26 |
fomc | 1,998 | These things, it seems to me, give us six years worth of information and they are all off the charts. | 23 |
fomc | 1,998 | Dino Kos just gave me a specific reference that helps to illustrate the point. I think the current level of implied volatility is double the historic; that is a very skewed result. The rush to try to hedge in the options market has been making the options market, which people rely on, very thin. So, I was focusing on t... | 78 |
fomc | 1,998 | President Parry. | 4 |
fomc | 1,998 | I have a question for Peter Fisher or Don Kohn on a somewhat different issue. The spread between 10-year Treasury bonds and the inflation-indexed bond has narrowed very significantly. I think it has narrowed to a little over 1 percent. That is amazing when we consider that the spread presumably includes the effects of ... | 117 |
fomc | 1,998 | Let me first discuss the mechanics. There clearly is a lack of supply in relation to demand, whether it reflects a flight to quality or a closing of the spread trade. I think a number of people in the market are now realizing that they have to shift their basic assumptions about how to think about the Treasury curve re... | 238 |
fomc | 1,998 | There is an implicit forecast in that arbitrage of the BLS's CPI over a long-term period. The question is whether we should treat that implicit CPI forecast as a true reflection of the view of the inflation risk in the marketplace, assuming that the CPI is measuring inflation accurately. It is not a supply/demand issue... | 130 |
fomc | 1,998 | That was my question! | 5 |
fomc | 1,998 | I don't think you should interpret it as a good forecast. I don't think that's what the market is doing. I think the trade you are suggesting is a very good one and might be very profitable for you if you or anyone wants to make it at this moment. [Laughter] | 57 |
fomc | 1,998 | When can we do that? After the end of the meeting? [Laughter] | 17 |
fomc | 1,998 | The illiquidity of the indexed bonds is notorious. The dealers do not like trading them. | 19 |
fomc | 1,998 | Peter, it is not a trade! You buy it, and you put it away. | 18 |
fomc | 1,998 | I agree with you. | 5 |
fomc | 1,998 | I do think that the market has put a greater premium on holding liquid assets in these very uncertain times. We can see that in the spread between Treasury securities and federal agency securities, even the benchmark agency securities, which are extraordinarily liquid. That spread has widened out by 15 basis points. Th... | 73 |
fomc | 1,998 | I was about to say that is a good case. This is the extreme form of that. | 19 |
fomc | 1,998 | This is an extreme. Peter Fisher and Bob Parry are right in the sense that at least part of that decline in the spread between nominal and real rates and the extraordinarily low level of the spread reflect not so much expected CPIs but the extra premium on holding very liquid, nominal, on-the-run Treasury bonds. That p... | 226 |
fomc | 1,998 | Anybody else? Does anybody have any questions or comments on the memorandum on the swap network? If not, would somebody like to move approval of Peter's domestic operations? | 33 |
fomc | 1,998 | Move approval, Mr. Chairman. | 7 |
fomc | 1,998 | Second. | 2 |
fomc | 1,998 | Thank you, without objection. We now move on to Ted Truman and Dave Stockton. | 17 |
fomc | 1,998 | What can I say after all the talk and ink that has been spilled on international economic and financial developments since the Committee's August meeting? It occurred to me that the Committee's "central tendency" preference might be that I should shut up and get out of here. My so-called international friends have caus... | 1,723 |
fomc | 1,998 | The changes in the international environment just sketched out by Ted Truman were important elements in the alterations that we made to the Greenbook forecast. However, as you know, we also have had to contend with the noticeably more negative domestic financial conditions of the past month or so. The stock market has ... | 2,104 |
fomc | 1,998 | Thank you. Questions from my colleagues? | 8 |
fomc | 1,998 | I have two questions. Ted, it seems to me that our international assumptions are now fairly close to the worse case scenario that was presented to us last year in terms of the real impact on the economy. Would it make sense to think in terms of a worse case again, and what would be its probability? Do you have any thou... | 79 |
fomc | 1,998 | In preparing for this meeting, I looked back at the work that we did on a worse case scenario late last year. In one sense, we are close to the worse case, but it has taken a different form. The sense in which we are close is essentially in that the total impact on the U.S. economy is commensurate with it. It has taken... | 668 |
fomc | 1,998 | Sure. | 2 |
fomc | 1,998 | It is useful to think about worse case scenarios, but worse case scenarios do not always come true. Let me just end on that point. | 28 |
fomc | 1,998 | I have a question for Dave Stockton. The assumption in the forecast is that the saving rate remains basically constant at one half percent. That seems a little surprising given what happens to the equity market and particularly with the coefficient that you have in terms of net worth. I presume that what is happening i... | 116 |
fomc | 1,998 | There is some downside risk there. I think the size of the stock market correction we have in this forecast, taken by itself, would have been expected to boost the saving rate by at least a couple of tenths. I should point out that one of the things that keeps the saving rate down is that we do have some offset coming ... | 98 |
fomc | 1,998 | I see. | 3 |
fomc | 1,998 | But I think there is some downside risk there as you suggest. | 13 |
fomc | 1,998 | Thank you. | 3 |
fomc | 1,998 | President Stem. | 3 |
fomc | 1,998 | Thank you. Ted, I would like you to elaborate a little on Brazil and the risks there because I have the sense that at least some in the international financial community are trying to draw a line in the sand with regard to Brazil. Yet, while you said you were expecting the Brazilian real to depreciate, you are expectin... | 86 |
fomc | 1,998 | When we do these forecasts, there is a tendency to be at least slightly conservative. There are so many different scenarios that are possible for Brazil. We took a sort of average of what we felt was a reasonable set of scenarios in which we assumed that the Brazilians basically have three problems: they have a fiscal ... | 234 |
fomc | 1,998 | Yes. | 2 |
fomc | 1,998 | I think that is one of the problems with these situations. Brazil has an election on Sunday, so I don't imagine that the president of Brazil is going to say they are about to devalue. Nor do I think they want to devalue. They actually may be considering a widening of the band. Setting a faster rate of crawl is not as m... | 234 |
fomc | 1,998 | Any further questions? | 4 |
fomc | 1,998 | Ted, I have a question on Europe. Some of the discussions that I have heard in terms of whether Europe should lower its interest rates are that as they move toward convergence, their interest rates are coming down in effect. Do you agree with that? | 50 |
fomc | 1,998 | Yes, and that has been in our forecast. On that point, we have tended to be somewhat more optimistic all along. That may not have been the case initially when we probably had convergence at a higher level. Fairly early on, however, we had convergence at the relatively low French and German level and the beneficial effe... | 287 |
fomc | 1,998 | Thank you. | 3 |
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