kakeith406/op-fed huggingface dataset:
Prior discussion:
speaker: MR. GUFFEY.
text: The CPI in our judgment, however, is going to continue at a fairly rapid rate. Our judgment is that it will still be in the 11 to 12 percent range in the fourth quarter. As to the fiscal side, obviously there will be much more expansion than the staff or the Administration are forecasting. And as to a tax cut, I would agree with whoever said it would be a tragedy. 
speaker: CHAIRMAN VOLCKER.
text: Governor Partee. 

MR. PARTEE. "I'd have inflation a little higher than the staff has--at 9 to 10 percent, say, for the deflator and 10 to 12 percent for the CPI in the year ahead."

Full utterance: Well, I have been concerned about defense spending as a question mark in the outlook. I must say that the chart the staff has provided us, showing an alternative with $10 billion more defense spending this year and $20 billion more in 1981 and in 1982 on top of the 6 percent real growth that's already in there for nonpersonnel costs, strikes me as a good liberal estimate of the extra defense spending that might occur or that is possible in the short run. And I would point out to you that it doesn't change the numbers all that much. I believe they did this with the model, so it includes orders effects and that kind of thing--that is, effects that occur before the actual defense spending. So, both that and the fact that it seems to me to look a little less [tenuous] than it was a month ago make me feel that it isn't such a big possible plus in the economy in the immediate future as it might have been. Also, the saving rate is just very difficult [to forecast]. New York has a continuation of a very low saving rate throughout 1980 and one could argue that there has been a permanent shift in the saving rate. I don't think so. I think it's going to come back up. I agree with the staff on that. There is no evidence of a permanent move from money to goods of the kind that would be indicated by that. So, I come down to an expectation that real GNP will fall some this year, though probably less than the staff has [in its forecast]--maybe 1 to 2 percent. The employment rate I am quite sure will rise significantly because I just don't think it is possible that services and trade will continue to add to the employment rolls without output, without a commensurate value added, much longer. So a 7-1/2 percent fourth-quarter unemployment rate is probably a reasonable forecast. I'd have inflation a little higher than the staff has--at 9 to 10 percent, say, for the deflator and 10 to 12 percent for the CPI in the year ahead. As for fiscal policy, I think there will be a tax cut but probably not until next year. That's not as early as the alternative staff projection has it, which is the middle of this year. It probably will occur in early 1981, sometime in the spring, and it will improve 1981 results a little from what the staff has projected. But I would point out to you that I think an absolutely binding assumption on the recovery of the economy is the monetary assumption which, of course, we have the ability to control. Did I get everything on this [list]?

Opinion: yes
About monetary policy: no
Prior discussion:
speaker: MR. PARTEE.
text: Oh, I don't disagree with that. It's a question of whether one thinks this [degree] of weakness in the economy is reasonable. 
speaker: MR. WILLES.
text: That's right. Now, what I find most puzzling--and I will copy one of Fred Schultz's lines, which I always thought was mine, and that is that I have a very simple mind-- 
speaker: MR. SCHULTZ.
text: Well, some of us will agree with that! 

MR. WILLES. "But the Bluebook says on the previous page that for the last six months M-1B growth has only been 6.1 percent, so the drop isn't as big as it might appear from the [table] on page 6."


Opinion: no
Prior discussion:
speaker: MR. BALLES.
text: Well, if I could, I'd just raise one more point. In asking my own staff to review what went on during that February period, it seemed pretty clear to us that the staff here and in New York had done a fine job of guessing what the multiplier was going to be, what the total reserves should be, and what the nonborrowed path should be. There was very fine work on that. Yet the net outcome was that total reserves got out of hand on the up side for a while. What I am trying to get to the bottom of, with the benefit of hindsight, is how you and Peter now think that could be headed off in the future. 

MR. AXILROD. "Well, our views are probably marginally different."

Full utterance: Well, our views are probably marginally different. A difference is that I might allege that we could hit the total reserve path week to week. I don't think it's very important to do it, but we could without lagged reserve accounting. But we'd have to have very large movements in the federal funds rate because we'd have to force the banks, within the statement week, to adjust their deposits to the total reserves we'd put out there. We'd have to force them to do it. Without lagged reserve accounting that is possible. With lagged reserve accounting, that could also occur. If we allow enough pressure on the funds rate, they could make the adjustments in deposits but we just won't see it in total reserves until two weeks later. So within a very short-run period it would look as if we were missing our total reserves; but actually we'd be getting adjustments in deposits that would be [evident] in required reserves two weeks later and we'd really not be off very badly. We would just be over path for a while and then we'd be back on path. That's the essence of what Mr. Sternlight is saying and I wouldn't quarrel with that particular statement. Indeed, the money supply is coming back on target now, or seemingly so, if March turns out as we are projecting it. There has been a rapid response to the rise in the funds rate that has occurred, just as happened in October, which may be a coincidence or it may be that the lags [in response to changes in] the funds rate are not six months [but are closer to] one day. It's hard to believe the latter but something like that has happened for two successive periods. I am not sure whether I have answered the question, but I think I at least came close to it.

Opinion: yes
About monetary policy: yes
Prior discussion:
speaker: CHAIRMAN VOLCKER.
text: [Laughter] They are limited I would say. 
speaker: MR. ROOS.
text: Are they limited, Paul, by the tradition of our taking an action and letting people decide what caused us to do what we did or are they limited for other reasons? I think your persuasive potential--and it isn't salary-setting time, so I'm not polishing the apple--is enormous. [Laughter] But I think the Fed has traditionally not used that potential in past years because we thought we should just take actions and let the people out there decide why we did. 

CHAIRMAN VOLCKER. "Some people don't believe the underlying theory, so they have no reason to believe it."

Full utterance: The only answer I could give you is that we would get a mixed reaction. Some people will believe it. People of monetarist persuasion will believe it more than others. Some people don't believe the underlying theory, so they have no reason to believe it. And there will be people in between. But I don't know whether there will be more or less [confusion]. There was certainly a lot of confusion in late November, December, and early January for a variety of reasons. People saw the reserve figures going up, which was one confusing aspect. The money supply figures weren't going up, particularly, but the reserve figures were; and interest rates were going down. We get all different constellations of events. But I think you are misled if you think that pure persuasion is going to convince people. It may have an impact, but we are going to get mixed reactions.

Opinion: no
Prior discussion:
speaker: MR. WILLES.
text: To some extent, profits have gone down. Also they have found reductions in energy utilization being forced by the policy and so on. There has also been a cut in real incomes because wages have not adjusted. They haven't allowed wages to [rise with inflation]. 
speaker: MR. TRUMAN.
text: And 5 percent productivity [growth]. 

MR. WILLES. "Therefore, it's a question of trying to minimize perceived risk."

Full utterance: And 5 percent productivity [growth]. That doesn't hurt. It's a question of what leads what; and that's a whole other discussion, which I won't take time for. The only other thing I'd say, Mr. Chairman, is that I've listened to this discussion today with great interest and was particularly interested in the way Chuck posed the issue. As we look over the history of what the Committee has done, what the economic profession has done, and what the economy has done, it seems to me that we ought to have very modest objectives because it's not at all clear that we understand in a very detailed way how this complex system of our works and how we can intervene in such a way as to make it work substantially better. Therefore, it's a question of trying to minimize perceived risk. And it seems to us, given our current state of understanding, that the best thing we can do is to lay out for all the world to see a fairly simple policy procedure, a rule that we're going to follow. I think it's very hard to lay out such a rule in terms of interest rates because interest rates are subject to too many variables. But we can lay out such a rule in terms of the growth in the aggregates. It's not going to get us to heaven; it's going to have some undesirable consequences from time to time. But on average monetary policy is probably less disruptive if it is more predictable than otherwise. As a consequence, it seems to us that the decision we made last fall was a wise one and we ought to stick to it. And we ought to be rigorously consistent about that because at least over time, as the markets come to understand that we are going to be rigorously consistent, we will reduce substantially not only the risk associated with our own policies but the over-reactions that the market sometimes makes to their perception of our policy. So, as others have said, if interest rates are going to go down, I think this is one time when we just ought to let them go down because we've got to make sure that we establish the credibility in the basic policy thrust that we've been following.

Opinion: yes
About monetary policy: yes
Stance toward easing (NLI): contradiction
Prior discussion:
speaker: CHAIRMAN VOLCKER.
text: I'm not quite sure why we need anything in the directive. It's not a decision. This kind of vague statement isn't going to affect what we do before the next meeting anyway. 
speaker: MR. PARTEE.
text: I'm told that my subommittee, of which you were a member at the time, proposed that it be in the directive. I can't remember why. 

CHAIRMAN VOLCKER. "Well, I can't remember why either."


Opinion: no
Prior discussion:
speaker: VICE CHAIRMAN SOLOMON.
text: This difference in assumption has been there for two months now. 
speaker: MR. AXILROD.
text: I'm not sure exactly how that 7-1/4 percent got in there, but I probably ought to explain, President Mayo, that it is sometimes difficult to make a distinction between projections and targets. 
speaker: MR. MAYO.
text: It may be a derivative figure. 
speaker: MR. AXILROD.
text: And what we have in alternative A is 7-1/4 percent growth in the fourth quarter, which would be the implicit target if you were going to hit 4-1/2 percent for the year. 
speaker: MR. MAYO.
text: I see. 

MR. AXILROD. "So in the Bluebook where we have the 7-1/4 percent [growth rate], that is the target necessary to hit a particular level over the year."


Opinion: no
Prior discussion:
speaker: CHAIRMAN VOLCKER.
text: We have this question of changes in the terms of the swap agreements on which we have a memorandum. Just by way of background, the Committee agreed to this in principle. I don't think it requires a formal action. In 1978 there was no formal action, was there? 
speaker: MR. ALTMANN.
text: No, not on these issues. 

CHAIRMAN VOLCKER. "And they are prepared to do so if we agree in principle."


Opinion: no
Prior discussion:
speaker: VICE CHAIRMAN SOLOMON.
text: When Arthur Burns was here, he would sometimes give a daily limit to the New York Desk. He discontinued that after a while. But there is also some consensus between the Treasury and the Fed and the Desk as to some broad range of tactical day-to-day type limits. 
speaker: CHAIRMAN VOLCKER.
text: But those are tactical decisions, essentially. I believe we're clear now on the various types of limits that are in [place]. 

MR. PARDEE. "But it is important to know that the limit on how much we can buy in Deutschemarks, which is $1.5 billion, has been set by the Committee."


Opinion: no
Prior discussion:
speaker: MR. BLACK.
text: It seems to me, Mr. Chairman, that if we did this, we wouldn't have to go through the process of trying to estimate what the demand for money looks like, what it's shaped like, and all those things. We would make our best estimate of the reserves it takes to give us the [desired] growth in the aggregates. And what happens is that the demand for money, whatever the shape [of the curve] is, will determine the level of the federal funds rate. 
speaker: CHAIRMAN VOLCKER.
text: Well, that implies that there's no slippage either in our estimates or in the linkage. And we just had this plus or minus 10 percent a month slippage. 

MR. BLACK. "But we wouldn't have the problem of the banks being able to borrow and [raise] the reserve targets."

Full utterance: No, I'm not ruling that out; I recognize that there are slippages. But I think we'd come very close to hitting a total reserves target, particularly on a monthly basis. And I don't mean a flat, identical percentage increase each month. I think we would have to adjust that total reserves figure for the non-monetary liabilities and what they used up or released in the way of reserves. We'd have to construct the target path very much as we do now. But we wouldn't have the problem of the banks being able to borrow and [raise] the reserve targets.

Opinion: no
Prior discussion:
speaker: MR. FORD.
text: That assumes that the Fed does its job on the monetary aggregates and further that eventually there is a change in spending and tax policy on stream that will have some favorable effects on the economy in real terms. And we think that by the end of the year the economy won't be booming but will be going along reasonably well, below the long-term growth path but in a positive vein generating growth of about 3 percent on average in the last two quarters with a reasonable unemployment rate and a lower level of inflation than we have right now. That [assumes] that we do what we say we're going to do on the aggregates and that people take seriously the need to reduce spending to keep the deficit under control. And we are assuming that they will. 
speaker: CHAIRMAN VOLCKER.
text: Mr. Mayo. 

MR. MAYO. "I would say that is fairly optimistic on spending cuts."

Full utterance: Coming from what with due humility we consider to be the lousiest performing District--economically speaking we have a recession--what surprises me is that we don't have more difference with the staff forecast for the national economy. Actually we are right in the center of the range here, which I guess I can attribute to our native optimism that somehow some of this is going to work out all right or, to put it the worst way, that our bad performance this year in the Chicago District will somehow be offset by Jerry's great efforts in the great Northwest, Bill's down in the Southeast, and John's in California. We are just going to have to muddle through on this. I think it's too early to come to Lyle's conclusion that we haven't really accomplished anything. We have set in place a lot of things and, although I'm usually the one who is more despairing of what the Reagan Administration is going to be able to do in the next year, I find that some of the comments here today are just too pessimistic for me. If his initial effort looks too small, I think the President is going to have to get into entitlements and he'll figure that he has three years to reelection and will swallow some sort of change in the indexing provisions now. It's the only way out. Unfortunately, our very vigorous new Budget Director got off on the wrong foot by starting off with proposed big cuts in foreign aid and, bang, he ran right against the new Secretary of State. I submit that he picked the wrong horse to start his campaign. I think it would have been better if he had started on the domestic side, even though there is always a tendency for a Budget Director to start on foreign aid because it has no voting constituency. Anyway, I think he can get some spending down; I hope by as much as the staff forecast shows. I would say that is fairly optimistic on spending cuts.

Opinion: yes
About monetary policy: no
Prior discussion:
speaker: MR. AXILROD.
text: One is to project what interest rate level the staff thinks is consistent with these aggregate targets and set a range of plus or minus 2 to 3 percentage points around that. That would again be different than taking the current range, because we don't think the current range is particularly consistent except for "A." We have done that in the past under previous kinds of operating procedures. I have felt reluctant in general to make the range substantially different, even though our staff forecast might be substantially different in a sense, from where the Committee had been. So, what these ranges really represent is some skewing of the present Committee range; they are skewed to allow for where we think the funds rate will be, but there is more room on top because our projection is that, if anything, rates will go higher than where it appears the rate will start off and not that they will go lower. So, they're in some sense judgmental in that respect, trying to distend the existing range to make allowance for how we think the funds rate comes out of the analysis. 

CHAIRMAN VOLCKER. "I will tell you what my personal attitude toward setting those ranges is."

Full utterance: I will tell you what my personal attitude toward setting those ranges is. I look at what the staff has to say, but I don't think that's the controlling thing. It's where do we want to have a consultation if it went either down or up, which may or may not be consistent with where the staff estimates that the market might bring it. Those estimates are not very good. They may be the best estimates that can be made, but I look at the range and say, as a first approximation: What level of interest rates might disturb us enough to want a consultation?

Opinion: no
Prior discussion:
speaker: CHAIRMAN VOLCKER.
text: Mr. Boykin. 
speaker: MR. BOYKIN.
text: Mr. Chairman, I come down pretty clearly for "C." The arguments for that position have been stated and I will not take the time to restate them. But just by way of summary: The strength of the economy worries me; I wonder about the recent rapid growth in money and that it may not be temporary; also the expectations issue looms rather large in my thinking. I think it's important to have a continuously firm policy. 
speaker: CHAIRMAN VOLCKER.
text: Mr. Winn. 

MR. WINN. "That would not be very helpful in terms of our longer-run objectives."

Full utterance: Mr. Chairman, there are several things we haven't really talked about this morning, including the international situation, the Middle East, and a number of other things that certainly could alter the outlook very quickly. A second point is that I'd be very happy if somehow we could get away from the check writing privileges on these money funds, because I think we are exposed there with the funds investing in issues that could go sour on them. We may have more volatility built into this than we are thinking about. The third is that we talk about targets as if they were fixed and we forget base-drift and a whole lot of history that goes into them. I'm not sure that hitting the midpoint of our new range is what we really ought to be doing. A little miss on the low side might be more helpful than misses on the high side. I'm disturbed by the M2 and M3 figures, which tend to go on the high side in this set-up. On the other hand, I have some sympathy with Lyle's point of view in that I'd hate to see us run the rates up and then run them right back down again. That would not be very helpful in terms of our longer-run objectives. To take a stance at this time, I would be content to be able to hit somewhere between "B" and "C" rather than to set a target and then be all over the lot in terms of our performance. I, too, would be inclined to raise the borrowing objective to help move in that direction; I'd go to $2.1 billion or something in that neighborhood as a first move.

Opinion: yes
About monetary policy: yes
Stance toward easing (NLI): entailment
Prior discussion:
speaker: MR. SCHULTZ.
text: Well, I think you know that I have less and less confidence in M-1B; I give less and less weight to it. 
speaker: MR. BLACK.
text: One thing that has been overlooked is the assumption that the inflation rate will be as high as the staff has said. If it's lower than that, one doesn't have to make such heroic assumptions about the increase in velocity. 
speaker: MR. PARTEE.
text: And if it's higher than that? 
speaker: MR. BLACK.
text: Well, then you have to be really-- 

MR. ROOS. "So, I think they are two different things."

Full utterance: If our primary purpose at this moment--maybe this isn't our purpose--is to impact inflationary expectations, we would have to announce, in understandable terms, a reduction in the rate of growth of the narrower aggregates. I don't think it's realistic to think that we can say we're only going to shade down M1--if we're going to call it that--very slightly because we think something is going to happen to a thing called velocity or the money demand function. When I read these financial letters, I seldom see any reference made to these more technical aspects of what we're trying to do. They talk about our published ranges in simple terms and whether or not they think we're going to be able to achieve them. So, I think they are two different things. The technical aspect of what we're doing is something different from the impact we're trying to make on inflationary expectations. And the latter has to be done in a simple manner and has to involve a discernable reduction in the actual figures from the current 3-1/2 to 6 percent to something that to less knowledgeable and less technically oriented people looks like a continuation of our resolve to reduce these ranges gradually.

Opinion: yes
About monetary policy: yes
Prior discussion:
speaker: VICE CHAIRMAN SOLOMON.
text: We earn our salaries! 
speaker: CHAIRMAN VOLCKER.
text: I have a footnote in my mind to all of this, that if the figures for the next two weeks come out widely different than our current expectation, I think we need to have a consultation and relook at all these decisions. So, I will make a [mental] footnote. Maybe we ought to put in our record that we are going to consult at-- 
speaker: MS. TEETERS.
text: That will give you time before your testimony. 

CHAIRMAN VOLCKER. "Yes, we will have a consultation before the testimony to confirm all of this."


Opinion: no