Prior discussion:
speaker: CHAIRMAN GREENSPAN.
text: [Hearing none,] I guess everybody has read the two books and all the questions have been answered! 
speaker: MR. BROADDUS.
text: Thank you very much, Mr. Chairman, for the opportunity to summarize the study. 
speaker: CHAIRMAN GREENSPAN.
text: And thank you very much, indeed. We'll now move on to Gretchen Greene and operations of the Foreign Desk. 
speaker: MS. GREENE.
text: [Statement--see Appendix.] 

CHAIRMAN GREENSPAN. "But it came out pretty well."

Full utterance: Thank you very much. Let me just add something about that intervention episode. It resulted from fairly close coordination between the Fed and the Treasury. When we began over here to see the spillover effects on the exchange rate, on the bond market, and on the stock market, the notion of a deterioration in confidence became, I think, somewhat more evident than it had been previously. We had been arguing here that we had a necessary condition to get a response in the market from intervention because the market did not expect intervention, meaning it was net short. And in our discussions with the Treasury we suggested that a two-pronged approach be initiated that day. One was to intervene moderately in the market but visibly. This clearly came as a surprise to the market; just watching the screens one could immediately see a variety of the shorts begin to cover. Concurrently, we knew that there were opportunities for both Messrs. Bentsen and Summers to make remarks that day, considering the fact that in the period immediately preceding, the President--and obviously even earlier Secretary Bentsen and Secretary Brown--had made comments which suggested, as Gretchen pointed out, that there was perhaps some concerted American policy to strengthen the yen. The truth of the matter is that no such policy existed. These were in the nature of ad hoc comments by commentators who were not discussing American policy, but really were observers of the scene who concluded that history tells us that if the exchange rate of the yen rises, the Japanese surplus will fall. In fact, we are not certain what would happen. Indeed, my suspicion is that if we actually tried to create changes in exchange rates by consistent intervention, the secondary consequences in the markets, mainly in the expectations area, would very likely make the correlations which are fairly robust between real exchange rates and current account deficits break down. So, what we were trying to do was to indicate that these comments were nothing more than academic discussions about relationships. I think we were about 20 percent successful, which is about 10 percent more than I would have thought. But it came out pretty well. In fact, I told [my colleagues] that I thought the [outcome] that day was about as good as it gets in this endeavor to intervene in the markets and not to expect that there is an easy process here by which one can readily manipulate exchange rates. To his credit Larry Summers, who is very knowledgeable about all of this, has been very cooperative with us; he has made certain to keep us fully informed about any issues and discussions that they have been involved in, and we have tried to reciprocate. Hopefully, that process will continue. Any questions for Gretchen? Tom.

Opinion: yes
About monetary policy: no