Prior discussion:
speaker: MR. PARTEE.
text: I must say it was strengthened a little by Steve's analysis yesterday but I have felt that for some time and I continue to feel it. I don't know, but I suppose we have selective memories. Lyle can remember the times when M1 didn't tell us anything. I can remember the times when it did-- 
speaker: MR. GRAMLEY.
text: The two of us make a great team! 

MR. PARTEE. "I mean if lowering rates isn't producing some kind of a calamitous result internally."

Full utterance: --and somehow the latter times strike me as being more important. But we always have to be very careful in using M1 because there can be--as there was, I think, in 1982--shifts in the demand for money and we have to be sensitive to that. We don't want to ride our money supply target without regard to what is happening in other elements of the economy or in other aggregates or credit or in market conditions. But among the aggregates I think it is the most reliable and the one that we ought to put the most confidence in. I agree with Pres that we ought to reconsider the long-range targets for 1985. I'm inclined to think that we ought to put M1 growth back to 4 to 8 percent as it was for this year both because we have room for 4 to 4-1/2 percent real growth in the economy and because we've fallen a little short. One way to make the adjustment for the base drift would be to say "All right, we had growth a little lower than we expected this year and we'll take a little higher growth next year if necessary to bring about this 4 to 4-1/2 percent real expansion in the economy. I think that makes a lot of sense. And I don't think in that context that it would be taken as a backing away from our inflation fighting attitude; I think it would be quite acceptable. I also agree, and I've never said this before in a meeting, that we ought to pay considerable attention to the exchange rate and we ought to do what we can to bring the exchange rate down. That also would suggest, other things equal, that when we can we ought to do things in the money sector that are apt to produce somewhat lower interest rates. By "other things equal" I mean if lowering rates isn't producing some kind of a calamitous result internally. I don't know whether it's going to bring the dollar down; certainly, it hasn't so far. But I suppose the weight of the evidence over time is that lower interest rates in this country might tend to do that. I wouldn't say we should make the exchange rate the target of policy [unintelligible] or something like that, but I'm very disturbed about this import situation. I think it's just going to have to be dealt with. If the exchange rate does come down--remembering also that a characteristic later on in periods of expansion is that we start to get more inflationary pressures--with lower exchange rates going through the third year of expansion, it seems to me that prices might be on the high side of the staff forecast. I guess I'd be prepared to make some price concession for getting the exchange rate down because I think it's that important a problem. I think I've answered all the questions, so I'll end at that point.

Opinion: yes
About monetary policy: yes
Stance toward easing (NLI): contradiction