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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 | We didn't know that there were no bonds in our portfolio! [Laughter] | 16 |
fomc | 1,998 | Whatever the Treasury's reasons might be for wanting to increase the outstanding stock of index-linked securities, I would be troubled if we were, in effect, to undertake to cancel some of those securities by monetizing them. As I understand it, a problem with that market has been its illiquidity; it is not a market th... | 145 |
fomc | 1,998 | There is something of a "Catch-22" about the liquidity issue. I'm particularly sensitive to that issue because, while Wright Patman was free to have his views, one of the jobs the Committee has assigned to me is to worry about what I would do if I had to sell large amounts of securities within a short period of time. W... | 551 |
fomc | 1,998 | You also should point out that you are hemmed in by the constraint that you have to hold a certain amount of securities on your balance sheet in order to implement the directives that the Committee gives you. Although I guess you could buy furniture! | 48 |
fomc | 1,998 | You would have to authorize me to do that I think! It is a choice of asset class. | 20 |
fomc | 1,998 | Governor Rivlin. | 4 |
fomc | 1,998 | We could, of course, unbalance the budget to make it easier. [Laughter] Peter, I was already persuaded that you have a very hard job and that you do it well, and this little schematic of how hard it has been recently was very persuasive. However, I didn't hear anything that could be of help to you other than the possib... | 117 |
fomc | 1,998 | The discount window aversion is probably the message. Don Kohn and I have been working for several years with the discount officers in the System. We have been talking with money center banks, trying to get them away from the discount window aversion that was prominent in the late 1980s and early 1990s. We have seen al... | 162 |
fomc | 1,998 | Let's go back to the TIPS issue for a moment. You are operating under authority that has been given to you. The ability to choose the classes of assets in which you invest is also implicit in those regulations. | 43 |
fomc | 1,998 | Yes. | 2 |
fomc | 1,998 | The point that I am raising is that you have the authority to buy TIPS, unless the Committee decides to rescind it. Am I correct? | 30 |
fomc | 1,998 | Yes, absolutely. There is going to be a headline effect: When I enter the market to do a coupon pass exclusively for TIPS, it will generate a certain amount of news. I have the authority to do this, but I didn't want to do it without informing you in advance. | 58 |
fomc | 1,998 | The reason I raise the issue is that if there is a very strong predilection that it is a bad idea, it is better that you know it beforehand. | 33 |
fomc | 1,998 | That's why I'm raising the issue. | 7 |
fomc | 1,998 | Now is the time to speak up if anyone has a strong objection. Silence presupposes acquiescence. | 22 |
fomc | 1,998 | It would make a wonderful column by Alan Abelson. | 11 |
fomc | 1,998 | President Poole. | 4 |
fomc | 1,998 | I agree with Jerry Jordan that it does not matter, in buying securities at auction, whether the Treasury is issuing conventional bonds or TIPS. In either case, we are just taking them off the market. So, I don't think it's a good idea to buy them at auction either. I think TIPS are an experiment. It has not been under ... | 195 |
fomc | 1,998 | Governor Kelley. | 3 |
fomc | 1,998 | Mr. Chairman, I have no doubt that Peter has a real problem that needs to be worked on, and I wish I had an answer for him. However, I very much identify with Presidents Jordan and Poole in that I would prefer to stay out of this market. It seems to me, Peter, that given the very small size of these issues, if you buy ... | 105 |
fomc | 1,998 | If I can first respond a little further to President Poole, I then will address your question, Governor Kelley. The Treasury knows in advance what we are going to be buying. They make the decision regarding the size of a floating supply they want to have. Part of their decision is based on knowing what we will tend to ... | 321 |
fomc | 1,998 | I guess it's a new notion to me that we would be promoting the market by buying some of these bonds and retiring them from circulation. | 27 |
fomc | 1,998 | We are part of the U.S. monetary authority and the largest holder of U.S. Treasuries. The dealers view our periodic coupon passes, through which we expand our holdings of securities, as a normal part of our support for the Treasury market. And our purchases are seen by the dealers as a process that thins out their inve... | 71 |
fomc | 1,998 | President Hoenig. | 4 |
fomc | 1,998 | Mr. Chairman, I have just two comments. The first is on the issue that is on the table right now. I understand where Peter is coming from, but I would feel more comfortable if the TIPS market were deeper; with time it may become deeper, and in that event we would have less impact on it. I recognize that Peter has had d... | 209 |
fomc | 1,998 | President Broaddus. | 5 |
fomc | 1,998 | I agree strongly with Jerry Jordan, Bill Poole, and Mike Kelley on the TIPS issue. It seems to me that from a policy standpoint the great advantage of this market is the possibility that it can give us a clearer read on inflation and price level expectations down the road. We should not confuse that picture in any way,... | 77 |
fomc | 1,998 | Vice Chairman. | 3 |
fomc | 1,998 | I would like to applaud what Tom Hoenig just said about finding ways to make the use of the discount window a more normal step in American banking circles. On the TIPS issue, it seems to me that by our inactivity in the TIPS market we have been saying that indexed securities somehow are different from other Treasury se... | 203 |
fomc | 1,998 | Let me just say that the ability of these securities to give a useful view of long-term market inflation expectations is being significantly impaired by what is undoubtedly a very large and variable illiquidity premium in these markets. Anyone looking at the difference between nominal and TIP yields on 30-year bonds an... | 321 |
fomc | 1,998 | I think I support Peter Fisher and Bill McDonough on that. I polled the chairman on this, but I couldn't quite tell where he was coming out. [Laughter] | 37 |
fomc | 1,998 | If you can figure out where I stand, let me know! [Laughter] | 17 |
fomc | 1,998 | I will not pretend that I know much about New York money markets, but it is true that these securities have a liquidity problem, and that does make it hard to interpret their inflation signals. Peter and Bill are arguing that our present behavior has actually distorted the market a little, and I agree with them. It is ... | 162 |
fomc | 1,998 | President Poole. | 4 |
fomc | 1,998 | I want to go back to the issue of the volatility of the federal funds rate, which has been mixed in with the discussion of indexed bonds. First of all, I don't quite understand the concern over volatility. There are simple ways of reducing volatility if we really want to do so. For example, we could post very narrow bu... | 187 |
fomc | 1,998 | I agree with that. I think the issue should really be how aggressive the Desk should be in its operations. The funds rates that fall out from those operations are what the market is telling us, and volatility in funds rates is market information that we can very readily suppress if we wish. I like the little boxes in P... | 90 |
fomc | 1,998 | I want to extend this discussion on volatility just a little further. I totally agree. I think that volatility has been used in the past as an estimate of whether the Desk is doing a good job or not. But I think it is useful to see how much volatility there is and how hard it can be on some days for the Desk to achieve... | 215 |
fomc | 1,998 | I think the alternative is to indicate that only those of superior moral fiber would have access to the window. [Laughter] | 25 |
fomc | 1,998 | What test are we going to use for that? | 10 |
fomc | 1,998 | Good question. | 3 |
fomc | 1,998 | With regard to indexed securities, I must say that I am not enamored with them. I thought that the decision to begin issuing them just as we were getting inflation under control did not say anything very positive about economic policy in the United States. However, the fact is they exist, and if we are going to get any... | 107 |
fomc | 1,998 | Governor Meyer. | 3 |
fomc | 1,998 | As I listened to the discussion on TIPS and SOMA, I was struggling with it for a while. When I heard the Chairman's remarks, they seemed to summarize my views just perfectly [laughter] because I wasn't quite sure where I would be. Then when I heard Governor Gramlich, I thought he really put it together very, very well.... | 104 |
fomc | 1,998 | President Broaddus. | 5 |
fomc | 1,998 | Just one other comment on your comment, Mr. Chairman, on the forecasting usefulness of TIPS. I think it's important to keep in mind that we are in a period of very low inflation and very low inflation expectations. If we were to move back into a situation where there was more inflation, I think we can foresee that inde... | 114 |
fomc | 1,998 | You are probably right in the sense that the illiquidity premium almost surely does not fluctuate with the inflation premium. As a gross measure, it must be useful to some extent. At this point, I would suggest that there has been enough discussion about the TIPS issue, and I think it might be useful for David Lindsey ... | 158 |
fomc | 1,998 | We will be adding a fair amount permanently to the System portfolio over the next 30 days. It would be nice to make the purchases in the next 30 days, but we will see how it goes. It is not vital. I think you've made a very good suggestion, Chairman Greenspan. | 60 |
fomc | 1,998 | Mr. Chairman, could we also get information from foreign central banks? After all, the U.K. has been involved in this a good bit longer than we have. And we may get some useful information from experience abroad. | 45 |
fomc | 1,998 | There are very few foreign central banks that have the kind of permanent portfolio that we have. There is also information from the U.K. and other countries about their experience with inflation-indexed securities. I don't think it is going to be apropos central bank operations. | 53 |
fomc | 1,998 | When I made reference to the Committee a little earlier, I was really referring to all 18 people around this table. This is a long-term issue, and on certain questions that go beyond one year, the views of all of us are important, not just the Committee members at any point in time. Peter Fisher. | 64 |
fomc | 1,998 | I need a vote on my operations during the period. | 11 |
fomc | 1,998 | Would somebody like to move approval? | 7 |
fomc | 1,998 | So move. | 3 |
fomc | 1,998 | Second. | 2 |
fomc | 1,998 | Without objection. | 3 |
fomc | 1,998 | I have two other items, which I hope can go a little more quickly. First, I need a vote authorizing renewal of our swap agreements with the Bank of Canada and the Bank of Mexico. By my silence and your inaction, all our other swap arrangements would lapse as described in Mr. Truman's memo and my memo to you of Septembe... | 204 |
fomc | 1,998 | President Broaddus. | 5 |
fomc | 1,998 | On the swaps, Peter, I would applaud you and all the others who have worked very hard to get to the point where we are with most of these arrangements. In the memorandum you and Ted Truman distributed at the time of the last meeting, you made reference to your intention to talk with the Bank of Mexico about their swap ... | 77 |
fomc | 1,998 | I had a conversation with a fairly high-level staff person at the Bank of Mexico. They are still persuaded that it is useful for them to have this swap line. They believe that the market sees them in a different light from the other industrial central banks. The language that we are going to use, suggesting that the lo... | 99 |
fomc | 1,998 | If I may add, our Canadian colleagues, who face the Quebec issue at this moment, feel even more acutely than the Mexicans that this is not the time to let go of those swap lines. | 41 |
fomc | 1,998 | I am not concerned about the timing of not doing it now. But I just hope that on our agenda going forward we would always listen to-- | 29 |
fomc | 1,998 | We certainly have that in mind. | 7 |
fomc | 1,998 | Yes. The presumption that these are truly balanced bilateral swap lines is clearly false. Swap lines are becoming increasingly obsolescent. I was surprised at how successful we were in unwinding the others. I thought we might have a shot at these last two, but it turned out, for the reasons that Peter Fisher mentioned,... | 98 |
fomc | 1,998 | Mr. Chairman, if I could make a comment. The Mexicans are not so much interested in the swap lines per se. They would like to have the world begin to think of Mexico as part of North America, not Latin America, and anything that appears to foster that view is very important to them. | 62 |
fomc | 1,998 | Further questions for Peter? Would somebody like to move approval of the reciprocal currency arrangements with Canada and Mexico? | 21 |
fomc | 1,998 | So move. | 3 |
fomc | 1,998 | Second. | 2 |
fomc | 1,998 | Without objection. Would somebody like to move the proposed change in the authorization for System repurchase agreements? | 20 |
fomc | 1,998 | Move approval. | 3 |
fomc | 1,998 | May I ask a question about that? | 8 |
fomc | 1,998 | Certainly. | 2 |
fomc | 1,998 | I do not understand to what extent the extension of the repo maturities is solving a problem for the dealers rather than solving a problem for us. I think our responsibility is to solve our own problems rather than the dealers' problems. | 46 |
fomc | 1,998 | It is very much about solving a problem for me, though the dealers are comfortable with the notion, so in that sense there is reciprocity here. We had been discussing this long before the emergence of the credit market conditions of the last two months. We had been thinking about this particularly in terms of Year 2000... | 326 |
fomc | 1,998 | We should not be taking any responsibility for the term structure, and that is the advantage of focusing our operations on the very short end. I would not like to see us possibly affect--or be viewed as affecting--the term structure even in just this maturity segment. | 53 |
fomc | 1,998 | First, I think it is important that we are working in the repo market, not in the fed funds market. There are very different dynamics involved. There are different supply and demand dynamics for funds and securities. Secondly, I do not think we are going to affect the term structure; we are price takers; we do not set ... | 212 |
fomc | 1,998 | Is there a second to the repo request? | 9 |
fomc | 1,998 | Second. | 2 |
fomc | 1,998 | Without objection. Let us move on to Mike Prell and Karen Johnson. | 15 |
fomc | 1,998 | Thank you, Mr. Chairman. Over the past couple of weeks, participants in the financial markets have become less certain that this meeting will bring another easing step. My sense is that they continue to perceive that you're strongly committed to keeping the economic expansion intact, but that they see recent developmen... | 1,538 |
fomc | 1,998 | As we stated in the Greenbook, our forecast this time for the external sector is not much changed from that in September. We have chosen not to assume that the depreciation of the dollar during the intermeeting period will be significantly reversed. As a consequence, our path for the dollar going forward is about 3 per... | 827 |
fomc | 1,998 | Questions for either? | 4 |
fomc | 1,998 | For Mike Prell, in Part 2 of the Greenbook, page III-19, there is a sentence that says "Growth of retail money market mutual funds and of currency outstanding, both domestically and overseas, was strong over the most recent two months." Do we have any indication of overseas holdings of currency, whether they have incre... | 91 |
fomc | 1,998 | Dave Lindsey follows that more closely than I do. | 10 |
fomc | 1,998 | We were actually prompted by a question from Governor Gramlich a couple of months ago to look intensively into this question. We have considerably improved our estimation procedures, including our seasonal adjustment procedures. We have come up now with a series that we find to be the best estimate we can produce. What... | 329 |
fomc | 1,998 | That seems kind of intuitive to me, given what is going on overseas. | 15 |
fomc | 1,998 | You might remember that the U.S. economy is growing much more strongly than many of these overseas economies, and that is supporting profits and growth of M2. One might think that shipments to these countries have risen some but that they just have not risen as much as demand for currency in the United States has risen... | 73 |
fomc | 1,998 | President Minehan. | 4 |
fomc | 1,998 | A question for Karen Johnson: When the Brazil agreement was announced recently, although the way it was discussed was confusing, there seemed to be at least a portion of it that was going to be handled under what might be characterized as a new philosophy that was incorporated in either the G-7 agreement or the Treasur... | 78 |
fomc | 1,998 | The standby encompasses different ways of financing the sum of money involved. A substantial portion of the initial tranches will be done under what is called the SRF, which is actually a facility that was created at the time of the Korean crisis. Now there is a variant of that under discussion, which would have contin... | 207 |
fomc | 1,998 | So, to get to the heart of the matter, you mentioned the IMF review in February. | 19 |
fomc | 1,998 | Yes. | 2 |
fomc | 1,998 | They could get money before that. | 7 |
fomc | 1,998 | They will. The first tranche will be disbursed upon the vote of the executive directors of the IMF, and that money will come immediately. The conditions of that first tranche have already been met. They were set and they had to do with some of the items in the fiscal package that were already announced and actions that... | 92 |
fomc | 1,998 | Okay. | 2 |
fomc | 1,998 | President Parry. | 4 |
fomc | 1,998 | Karen, I think it was a little more than a year ago that we looked at a worse case alternative for East Asia. One of the two countries that played a role in that was Brazil, and it is obvious from our discussion why that was the case. The other one, of course, was China. It seems to me that there are interesting things... | 239 |
fomc | 1,998 | I certainly take your point. The 8 percent number was somewhat unexpected. We have not really had the opportunity to look into it, and it is hard to do so with China because we don't get a lot of detail and can not get behind the scenes. I am skeptical but I can't cite good reasons for that skepticism other than that w... | 119 |
fomc | 1,998 | Of course, their approach to the problems is quite different with exchange controls and so forth. | 18 |
fomc | 1,998 | Yes, capital controls and the like. We expect them to be able to maintain the present exchange regime into 1999, something we had assumed previously with some trepidation, and it seems to be happening. But I think we probably do need to question the sequence of events and the policy choices they are making and ask some... | 80 |
fomc | 1,998 | Thank you. | 3 |
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