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fomc | 1,978 | It would be an improvement to have leased lines. I think everybody would agree with some improvement in the-- | 21 |
fomc | 1,978 | I think that's right. | 5 |
fomc | 1,978 | Well, we can use them for other things. | 10 |
fomc | 1,978 | Sure. | 2 |
fomc | 1,978 | But not with the cost of the secure-- | 9 |
fomc | 1,978 | Paul, have your people indicated how often--this can be rough--any of us Presidents ever adds anything to that call? I ask because I sure as hell don't. Maybe it is my own weakness or ineptitude--I'm using that word again. Our people think it is a laughable process. | 61 |
fomc | 1,978 | I've talked to quite a few of you individually about this since the last meeting and many of you have raised it with me. Peter can talk directly on how many Presidents ever say anything specifically. I think there is quite a different attitude among some of the Presidents. Some of them do feel it's important to stay in... | 146 |
fomc | 1,978 | And they wouldn't feel that way if it was just a Governor! | 13 |
fomc | 1,978 | No, the second part you'd get the Governor; the first part obviously you can't. | 17 |
fomc | 1,978 | The reason for the monitoring by the substitute Governor was to have that discipline. But there was another suggestion I had made and that is that there is no reason not to give the President a rundown on the market situation, all of which is publicly known, and inform him later in the day of the action. And the Presid... | 102 |
fomc | 1,978 | But it is difficult, Mr. Chairman, for any President to read between the lines as to the reasons and so forth. The telegram is cold. | 30 |
fomc | 1,978 | After [the program] has been implemented, of course, [someone from the Desk] can call you and explain it to you in complete detail. He can say this is why we did this and we want you to know why and please if you have any thoughts in thinking about tomorrow and so forth, is this the kind of approach that makes sense? | 71 |
fomc | 1,978 | My recollection of this, going back to the mid-1950s when I was once upon a time on the Desk, was that it was supposed to be a Governor and a President on the call. And through the years the Governor fell off. | 51 |
fomc | 1,978 | Disappeared. I think that is right, Paul. | 12 |
fomc | 1,978 | One reason is the timing of Board meetings. | 9 |
fomc | 1,978 | Yes. Well, what is your pleasure, gentlemen? This is a case where there is certainly no built-in fixed position on our part. | 28 |
fomc | 1,978 | My feeling frankly, Mr. Chairman, is that we can get by for a while without the participation of the Presidents but that we ought to seek to develop a secure communication system, which we could use for a lot of other things as well. | 49 |
fomc | 1,978 | I think in several years, with the growth in the market for this sort of thing--it is going to be needed more and more just for commercial reasons because the intercepts are very damaging to all kinds of communications. You are going to find more and more equipment and costs coming down and more and more techniques. Lo... | 152 |
fomc | 1,978 | You cannot hook an ordinary lease in New York or Washington--one that is secure. The garbage in between is the problem. | 25 |
fomc | 1,978 | You can have two phones. A guy can be talking with two phones. | 15 |
fomc | 1,978 | Maybe I didn't understand the question. | 7 |
fomc | 1,978 | Are you talking about extensions? | 6 |
fomc | 1,978 | I would think the most vulnerable link is between New York and Washington. That is where everybody is looking. | 21 |
fomc | 1,978 | That could be secure. And you can't be on the same line and understand that elsewhere, but you could be on a separate line. | 27 |
fomc | 1,978 | Even if it is unscrambled with one hand and transmitted through a box onto the other speaker. | 19 |
fomc | 1,978 | You would have an elaborate system there. Peter might be able to give all the unsecured information on the regular call on the leased line and give the secure information to the Board on the squawk box and then communicate one or two seconds later on the regular handset to the Presidents. | 55 |
fomc | 1,978 | You can't connect them up electronically, then? | 9 |
fomc | 1,978 | No, but you could do it at least two ways. | 12 |
fomc | 1,978 | It would be far too expensive to connect it electronically. It would be a whole research department project. | 20 |
fomc | 1,978 | Mr. Chairman, I wonder if there is some possibility of beefing up the content of the daily wire that all of us get in any event. Admittedly, it is after, rather than before, the fact, but that would not preclude a one-day-later critique or whatever, if that could be done. Speaking personally, that would be a perfectly ... | 172 |
fomc | 1,978 | Dave, do you have a comment? | 8 |
fomc | 1,978 | Well, I would support that for another reason. And that is that in my experience the most frequent contribution that a President makes in the phone calls is not on the techniques of the day-to-day call but if he feels the Desk is not moving promptly enough or is moving overly promptly [relative] to the directions of th... | 119 |
fomc | 1,978 | Well, certainly, before implementing anything we should work out a procedure. We should have an assigned President to continue to be in the loop in some way. That is certainly true. How do others feel? | 41 |
fomc | 1,978 | Mr. Chairman, I would endorse what Bob has said. I think it is important to maintain the integrity of the System, as it has been in the past. I would ask a question that has not been raised otherwise as to whether or not the supplier of this material--and I'm talking about the bridge principally, which I understand is ... | 166 |
fomc | 1,978 | I do know that they will lease the security equipment itself on the bridge. I have not asked that question. | 22 |
fomc | 1,978 | It seems to me that they are new in the business and if the Chairman's forecast is right--if mass development is going to take place in the period to come--this company will be in the forefront. And if they have us as a touchstone to sell, it may be very advantageous for them. I would like to see us look into that. | 72 |
fomc | 1,978 | The thing with that is that you pay for it, though, [in] a lease. Also, I think that-- | 25 |
fomc | 1,978 | You would want [the cost] to be reasonable. | 11 |
fomc | 1,978 | At this stage of the game, it would be a unique-- | 13 |
fomc | 1,978 | But I understand there is also competition in this, Mr. Chairman. There is at least one other company--it has three initials--with the same research and offering the same service and it expects to come out with something. | 45 |
fomc | 1,978 | We hope this competition is going to develop. | 9 |
fomc | 1,978 | Well, that may work [in favor of going] the lease way. | 15 |
fomc | 1,978 | This particular system has been being developed for several years at Rome airbase through an Air Force contract, and is reported to us to be one of the most-- | 32 |
fomc | 1,978 | It may be that there are other alternatives, Mr. Chairman. I am continuing to look at them. The demand in the private sector is very strong right now, as you say, for this type of solution. If suddenly one should appear, I certainly would be very interested. | 56 |
fomc | 1,978 | Mr. Chairman, when we look for this new system, I think we are in dire need of a greatly improved hard copy transmission system as well. | 30 |
fomc | 1,978 | Yes, we are going to do that. We need [to assess the] fallout of this whole discussion. I think we are undoubtedly going to lease lines where we would have control of our network and could use them 24 hours a day to transmit facsimile on a high speed basis. We are testing now and the pay-out for that will make this all... | 108 |
fomc | 1,978 | The wire has a delay of 2 to 3 hours; at least that is my experience. | 20 |
fomc | 1,978 | Oh yes. | 3 |
fomc | 1,978 | And the facsimile could, I think, be done immediately. | 14 |
fomc | 1,978 | If we get that done, you are going to get a much better copy, a much more readable copy. Some of this other stuff is very hard to decipher. | 33 |
fomc | 1,978 | The wire actually is done here around 12:30 or 12:45. | 17 |
fomc | 1,978 | I will secure that wire, by the way. | 10 |
fomc | 1,978 | We don't get it until after 1:00 or 1:30 our time in Kansas City. | 21 |
fomc | 1,978 | Mr. Chairman, I think we ought to go ahead with the New York lease line arrangement and work toward the idea of additional hookups and the security device. | 31 |
fomc | 1,978 | Why don't we also, Phil, draw up a procedure that takes account of a system that would keep a monitoring President in the loop to the maximum degree we can and puts a Governor specifically in the loop? And let's work toward the proposition that we want to return to the present system whenever we can get a feeling of se... | 89 |
fomc | 1,978 | [Unintelligible] out of the Board then. | 12 |
fomc | 1,978 | What is the security on that line? | 8 |
fomc | 1,978 | But it's after the fact. | 6 |
fomc | 1,978 | Yes, the reason that is not considered secure is that everybody in the market knows by then. | 19 |
fomc | 1,978 | But it really isn't after the fact. It indicates that there may another round of repurchase agreements necessary in the afternoon and so forth. So it is a real-- | 33 |
fomc | 1,978 | [It provides] preliminary indications of the aggregates [figures]. | 13 |
fomc | 1,978 | Sure. | 2 |
fomc | 1,978 | They are not quantitative, because the quantitative-- | 9 |
fomc | 1,978 | Yes, all of these things need to be better secured, there is no question. And that can be done. I think if you can get a lease line with the facsimile you're going to get much better security. As I said, we are going to have a 3:00 lunch. Nothing will happen in thirty days; we are going to keep exploring it. Gentlemen,... | 96 |
fomc | 1,978 | First, I want to apologize for a little delay this morning. It was because the Treasury [breakfast] had more eggs than usual and I didn't want to pass up the last opportunity to be fed before this ordeal. Before FOMC meetings I get a very big appetite! Second, I have to apologize for Steve Axilrod, but he's going on va... | 201 |
fomc | 1,978 | So moved. | 3 |
fomc | 1,978 | Second. | 2 |
fomc | 1,978 | Any discussion? All those in favor? SEVERAL. Aye. | 15 |
fomc | 1,978 | All opposed? Now, the reason Murray has been selected is because he has a mean streak. Art Broida was so kind that when I asked him to get a timer with a bell on it to keep us under control, he just couldn't get up the courage to do it himself. But as he left, he presented me with these timers, which [are hourglasses w... | 126 |
fomc | 1,978 | What are they--three minutes? | 7 |
fomc | 1,978 | Yes. And when your three minutes is up, he's going to say "next speaker." Three minutes for each one of us is an hour, so if we each speak three times for three minutes, it's three hours. | 44 |
fomc | 1,978 | How many times can you talk, though? | 9 |
fomc | 1,978 | Less. So those are your time limits. You didn't know this was your duty, did you? | 20 |
fomc | 1,978 | No, I didn't. I'm not sure yet whether you're serious. | 13 |
fomc | 1,978 | We are having a lot of fun but we are serious. My second serious duty is to note that Bob Black, Roger Guffey, and Larry Roos will not be at this meeting and they are being represented by their First Vice Presidents. George Rankin is here from Richmond, Henry Czerwinski is here from Kansas City, and Don Moriarty is her... | 602 |
fomc | 1,978 | [Statement--see Appendix.] | 6 |
fomc | 1,978 | Any questions or comments? | 5 |
fomc | 1,978 | One question, Mr. Chairman. Scott, to what extent do you ascribe some of the dollar's difficulties to the effort we've made to repay German debt? | 32 |
fomc | 1,978 | I think at this stage very little. It comes back to the question of how the marks are pulled out of the market. That is, the marks that we have acquired have been directly from the Bundesbank, which itself has been absorbing marks from the market in connection with capital export conversions. We have not been buying in... | 101 |
fomc | 1,978 | Is this publicly known, Scott? | 7 |
fomc | 1,978 | We've announced it, yes. | 6 |
fomc | 1,978 | Yes, the Treasury's Tony Solomon made an announcement some weeks ago. I think it's the first time the public had been informed of substantial repayments. Ernie, I think you had a question. | 39 |
fomc | 1,978 | I was wondering if Mr. Pardee could elaborate a little on the characterization of "ridiculously low levels." Can you put that in a setting a bit? | 32 |
fomc | 1,978 | Well, there are a number of ways you can look at it. As I say, these rates have moved [substantially]. The Swiss franc has moved practically 50 percent in the past few months and the yen the same--just in terms of how far the rates have moved in a very short period of time. Yesterday the Swiss franc moved by 5 percent.... | 155 |
fomc | 1,978 | This is not your own characterization. | 7 |
fomc | 1,978 | Well, in fact it is, but I don't want to interpose my own views because, as I say, we have been inundated with calls. People out of retirement have called and said, we want to find someone we can talk with to express our concern about what is happening to the dollar. We think the situation is ridiculous, it's overdone ... | 127 |
fomc | 1,978 | With your permission, at the end of this meeting I'd like to bring up the subject of countermeasures to this sort of situation. I'd prefer not to do it now but at the end of the meeting, if you all don't mind, because we had not prepared to do so. I'd better bring it up because there is something to [discuss]. I'm not ... | 82 |
fomc | 1,978 | Any clue, Mr. Chairman, on the discussion of the yen swap? | 15 |
fomc | 1,978 | I think we should discuss that with the Committee, yes. | 12 |
fomc | 1,978 | What happened yesterday, Scott, that caused this outbreak in markets? | 13 |
fomc | 1,978 | Well, under floating exchange rates, Mondays are usually the bad day because everybody--at least outside of New York--has newspapers to sit and read and Sunday newspapers tend to pick up all of the tag ends of [the news]. And when there's bad news for the week, that's the time when money managers begin to mull things o... | 220 |
fomc | 1,978 | What sort of volume did the market have yesterday? | 10 |
fomc | 1,978 | We had a big volume. Anything we wanted to do could have been done. We could have done $1/2 billion, if we wanted, in intervention. That would have satisfied some of the pent-up demands for other currencies. If you're not there, then not so much will go through, but the rates will move further. | 67 |
fomc | 1,978 | Chuck Partee. | 4 |
fomc | 1,978 | I think maybe that partly answers my question. I was going to ask you, Scott, whether you sense the kinds of conditions that would be characteristic of a climatic sell-off in the market. That's an analogy with the stock market and I gather that you are [getting] much more participation in the selling as you see it. The... | 100 |
fomc | 1,978 | But it's not a final sell-off; these things can go on for a longer period. | 18 |
fomc | 1,978 | I don't think we could characterize it as final. | 10 |
fomc | 1,978 | But it's a climatic situation. | 6 |
fomc | 1,978 | You have a massive amount of dollar holdings that could be moved if there were a real panic. | 19 |
fomc | 1,978 | So it could go much further. | 7 |
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