kakeith406/op-fed huggingface dataset:
Prior discussion:
speaker: VICE CHAIRMAN MCDONOUGH.
text: And though our models forecast some increased inflation in 2000, our models have been consistently wrong in forecasting inflation, as have everybody else's models around this table. Therefore, I think we should be somewhat modest about basing any policy change on that forecast. It seems to me that the present stance of policy is extremely well balanced. Thank you, Mr. Chairman. 
speaker: CHAIRMAN GREENSPAN.
text: President Boehne. 

MR. BOEHNE. "There is, to be sure, some upward pressure on wages, but productivity gains and cost-cutting are acting as effective offsets."

Full utterance: Thank you, Mr. Chairman. Economic activity in the Philadelphia District remains strong and shows few signs of slowing. Labor markets continue to be tight, but competition remains fierce and there appear to be few inflationary pressures. The outlook is also positive whether one talks to manufacturers, retailers, auto dealers, homebuilders, or commercial real estate people. That said, however, one does not get the feeling that we are crossing over from strong growth to boom conditions. There is an absence of inflationary pressures in the pipeline. Businesses are still operating on the basis that prices will not rise. There is, to be sure, some upward pressure on wages, but productivity gains and cost-cutting are acting as effective offsets. And even in real estate, one does not get the sense of the kind of boom conditions that prevailed ten years ago, even in areas that are prone to such conditions. I think much the same can be said about the national economy. We see strong growth, few signs of a buildup of inflationary pressures, and the absence of boom conditions. As for the risks, the upside risk to the domestic economy is still there, as it has been; and the downside risk from abroad is also still there, as it has been. The risk of financial contagion, while still there, appears to have subsided--a little anyway. While a case can be made for tinkering with the federal funds rate to cancel, in effect, some of the insurance we took out last fall, I am much more persuaded that we should leave well enough alone for now and continue to see what unfolds in this truly remarkable economy. And it is remarkable in the sense that it is about everything one could wish for.

Opinion: no
Prior discussion:
speaker: MR. PRELL.
text: Our forecast of overall economic activity is, as I suggested, in the upper brackets of forecasts that one would find at this point and auto sales are a cyclically sensitive sector of the economy. I think therein lies a very important element of explanation. I don't think there is much more that I can say on this. We consult a number of models, and they give somewhat different results about the likely pattern of auto demand over the next couple of years. But as we look back at recent experience--at how much sales seemed to be above reasonable trends in the past two or three years--we don't see a compelling case for a precipitous decline from here, especially in a fundamentally strong economic environment. 

MR. PARRY. "Mike, I thought the section in the Greenbook on alternative simulations was particularly interesting, especially the comparison between the baseline and the flat funds rate scenario."

Full utterance: Mike, I thought the section in the Greenbook on alternative simulations was particularly interesting, especially the comparison between the baseline and the flat funds rate scenario. It seems to me, if one compares the effects of monetary policy actions on inflation expectations in the economy, that there is a greater sensitivity now than may have been the case a couple of years ago. And that makes sense to me. We are basically saying that markets are learning and responding to policy actions. But what is a bit confusing is that there is also, I would assume, considerable sensitivity to developments in equity markets as well. If one looks at those two Greenbook alternatives, there is a big impact on expectations as a result of the effect of a change in rates on equity prices. Could you talk a little about how expectations enter into the model now versus how they used to? Is there a greater sensitivity now to policy actions?

Opinion: yes
About monetary policy: yes
Stance toward easing (NLI): neutral
Prior discussion:
speaker: MR. JORDAN.
text: The less confidence one has in leading indicators, the more aggressive one has to be. One might have to see a blip or some new information in order to take policy actions. You might not like the characterization, but the label I would put on the simulation you called the realized-inflation rule is the "Bunker Hill" or "whites of the eyes" approach. As soon as we see a blip up in inflation, bang, we move and we move aggressively. Is that a fair message to come out with in regard to one's confidence or uncertainty about leading indicators? 

MR. KOHN. "If you do that in circumstances when you are uncertain about the supply side of the economy and you're experiencing favorable supply shocks, the outcomes are not bad."

Full utterance: I think that is a fair message, and it is illustrated in Chart 4 to a certain extent. I'm not sure about the gradualism part, but it certainly relates to the policy success that you can have. Chart 4 looks at that realized-inflation rule against one that is the same as the price-stability rule. Now, that price-stability scenario in Chart 3 is derived from the model. It assumes that households and businesses and the Federal Reserve have at least a pretty good idea about what is going on. They form their expectations. The Federal Reserve is assumed to have a very good idea what is going to happen in the future as it changes the funds rate. So in a sense this is about as well as we can do. The alternative is the case where we are not sure about what is going to happen in the future. The inflation-rule was used there to illustrate how, if you wait until you see inflation because you are not sure, it may not be such a bad rule to follow, provided there are certain kind of shocks occurring in the economy--that is, the favorable supply shocks. Secondly, as you noted President Jordan, once you see inflation--these are four quarter changes, so it's not just one quarter's worth of inflation--you do need to respond fairly robustly, twice as robustly as the Taylor rule would have you respond. If you do that in circumstances when you are uncertain about the supply side of the economy and you're experiencing favorable supply shocks, the outcomes are not bad. And they are certainly better than if you act on incorrect information. So, the basic message you took was approximately correct: That you can run a successful policy responding ex post under certain circumstances. You have to be careful; that's not the case under all circumstances. It's good to be preemptive where you know some information. But if your policy response is more reactive, you have to get more aggressive.

Opinion: yes
About monetary policy: yes
Stance toward easing (NLI): entailment
Prior discussion:
speaker: CHAIRMAN GREENSPAN.
text: President Parry. 
speaker: MR. PARRY.
text: Mike, how would you characterize the degree of monetary restraint in the year 2000 in this forecast versus the January forecast? I ask that because nominal rates are about 1/2 percentage point higher in the latest forecast and inflation rates in overall price indices like the CPI are up by almost the same amount, but the core rates are about the same as in the previous forecast. I'm not sure, in your deliberations and the way you look at this, how you formulate your views about real rates. And I was curious about how you see the difference in this forecast versus the previous one. 

MR. PRELL. "We have long-term rates going up more than before in the corporate market, in part because my sense was that we really had too much yield curve flattening before and more tightening will be needed in the long end."

Full utterance: Real rates have been more difficult to gauge than usual in this period because of the distortions, if I can put it that way, that have occurred in the fixed-income market. We've seen Treasury yields come down substantially, while movements in others rates have been something of a mixed bag. But in many cases long-term rates have actually come down a bit and run below our expectations. In terms of inflation expectations, there are some hints--but only some--of an upward movement, largely in response to what has been occurring in the oil market. And there are some counter indications, too. The TIP spread, for example, certainly hasn't been moving up lately. Again, that might be confounded by the Treasury market illiquidity. So it is rather difficult to gauge. Bottom line, we felt that while the stock market seemed to be on the track we were anticipating--at least up until the time we fixed the number for our assumption here--interest rate developments certainly were not on the tighter side of what we were anticipating. The economy was showing more momentum coming into the year. And we felt that some greater tightening of policy probably would be required to keep aggregate demand and supply in a balance similar to what we had in the prior forecast. At this point, we have what I would perceive to be a rather similar degree of tightening in the real funds rate because we do have a somewhat higher inflation path. We have added only a 1/4 point on the funds rate. We have long-term rates going up more than before in the corporate market, in part because my sense was that we really had too much yield curve flattening before and more tightening will be needed in the long end. Perhaps it will take more tightening in the short end in order to impose an upward restraint on the economy and bring aggregate demand and supply back into balance.

Opinion: yes
About monetary policy: yes
Stance toward easing (NLI): entailment
Prior discussion:
speaker: MR. GRAMLICH.
text: So this really should be interpreted as a measure of how long you can follow the policies you are describing? 
speaker: MR. FISHER.
text: Yes, how long we could tread water in this way. 
speaker: MR. GRAMLICH.
text: My second question relates to the on-the-run/off-the-run issue. Is there some reason we haven't done that before? It seems like a logical idea. 

MR. FISHER. "My point has been that if we let our share of the primary market expand, we would be collapsing the market for the on-the-run issues in nominal terms."

Full utterance: We do not purchase on-the-run issues in the secondary market. My point has been that if we let our share of the primary market expand, we would be collapsing the market for the on-the-run issues in nominal terms. That's the only point. We have not been purchasing the on-the-runs. However, we have been suppressing our demand, if you will, vis-a-vis this schedule for decayed securities that are way, way off-the-run. You can see on page 14 that we've been trying more or less to work our way up toward 15 percent all along the coupon curve. In that sense we have been buying issues decayed way, way off-the-run more aggressively; issues decayed in the 7-year area and the 4-year area are way off. So it is in that sense that I'm making the distinction here.

Opinion: yes
About monetary policy: no
Prior discussion:
speaker: MR. POOLE.
text: If that shows weakness--very low employment growth or a decline in employment--I think there will be a great deal of pressure, probably within the Committee and in the public at large, for us to respond. Quite frankly, I believe it would be better for us to anticipate that development rather than wait until we have such a piece of negative news. As I said before, I think there's ample space for rates to move up and not much space for them to move down. So, I would prefer to see us position ourselves in the middle, as I indicated earlier. 
speaker: CHAIRMAN GREENSPAN.
text: President Hoenig. 

MR. HOENIG. "And certainly we can wait until then."

Full utterance: Mr. Chairman, I too would prefer moving now. I think the funds rate is high and the effect has been to slow the economy as intended. In my view a quarter point reduction in the rate now would still leave us with a tight policy, one that continues to slow the economy, and yet it would recognize the risks that we've talked about around the table. I believe it is likely that we will have a conference call and that we will lower rates at that point. And certainly we can wait until then.

Opinion: yes
About monetary policy: yes
Stance toward easing (NLI): contradiction
Prior discussion:
speaker: CHAIRMAN GREENSPAN.
text: Why don't we have that problem, no matter which direction we see the risks, every time we move to an asymmetric statement? 
speaker: MR. JORDAN.
text: That's why I don't like being asymmetric! 
speaker: CHAIRMAN GREENSPAN.
text: Okay. Sorry! [Laughter] 

VICE CHAIRMAN MCDONOUGH. "He is very consistent."


Opinion: no
Prior discussion:
speaker: CHAIRMAN GREENSPAN.
text: It doesn't matter how it's done. 
speaker: MR. BROADDUS.
text: They take in revenue and it could be used for whatever purposes they want. 
speaker: CHAIRMAN GREENSPAN.
text: But the issue, in the context we're talking about, is that if the debt to the public is down to zero, they have to accumulate private assets. 
speaker: MR. GOODFRIEND.
text: May I answer that please? 
speaker: MR. BROADDUS.
text: Sure! 

MR. GOODFRIEND. "If one regards the revenue for money creation, which is sometimes called seigniorage, as a tax flow just like any other tax that the government receives on a yearly basis--"


Opinion: no
Prior discussion:
speaker: MR. KOHN.
text: But now you have something new to factor into your thinking about monetary policy. That doesn't necessarily mean that you need to vote on what that number is and publish the number. But it does mean, as you're thinking about your policy choices, that you need to keep in mind that it is possible for inflation to go too low. Actually, I think it's a compliment to the Committee that you've gotten to that point over the last twenty years. 
speaker: MR. PARRY.
text: That's exactly the point I was trying to make in saying that we need further Committee discussion of this. 

MR. MCTEER. "Maybe we ought to enjoy it instead of worrying too much about it!"

Full utterance: Maybe we ought to enjoy it instead of worrying too much about it! [Laughter]

Opinion: yes
About monetary policy: yes
Prior discussion:
speaker: MR. SANTOMERO.
text: If we must act, I guess I'd favor the GNMAs. And as a side bar, there are lots of MBAs out there who would be happy to run that portfolio for us. Given the weakness in the labor market, there are probably plenty available at the moment. Those are my comments. 
speaker: CHAIRMAN GREENSPAN.
text: Vice Chair. 

VICE CHAIRMAN MCDONOUGH. "It isn't at all clear to me what would give us the authority to decide--to make the highly political judgment--that pure Treasuries are okay but GNMAs or something else are not."

Full utterance: Thank you, Mr. Chairman. I associate myself very substantially with what President Santomero has just said. I think the GNMAs are preferable to the repos with foreign sovereign debt collateral for the reasons that he cited. I also would like to remind us of the resource constraint. The limited number of people who can work on this issue have been working flat out since September 11, and they were working pretty hard before that. So I think the first order of business really is that they finish the work on the contingency issues and relax on all of this other material until then, which would probably be a matter of, say, three to six months. At that point I think they should concentrate their efforts on GNMAs. I agree that management of GNMAs would be somewhat more complicated than managing what is in the portfolio now, but it is certainly doable. As President Santomero said, many firms that we supervise do that sort of work very extensively. I also believe that we have to avoid getting into the situation of saying that we will decide which securities are acceptable if they have the full faith and credit of the government of the United States. If the Congress and the President decide that an instrument has the government's full faith and credit, it is not altogether clear to me that, as a creature of the Congress and as an independent central bank, we should second-guess that decision. It isn't at all clear to me what would give us the authority to decide--to make the highly political judgment--that pure Treasuries are okay but GNMAs or something else are not. It is nice that we have been able to deal with pure Treasuries until now. As Don Kohn points out very well, even if deficits continue, the trends are such that we're going to have to make use of securities other than pure Treasuries. I think what the Congress and the President decide has the full faith and credit of the United States is clearly the right place to go. And if they decide that some other kind of credit has the full faith and credit of the United States, we may have to go there, too. Thank you.

Opinion: yes
About monetary policy: no
Prior discussion:
speaker: MR. POOLE.
text: We'll see parked aircraft brought back from the desert before we see the building of new aircraft. Power plant construction seems to have been revised down; because of the scale of power plants, the construction involves a rather substantial amount of investment. It seems to me that, if we're wrong about this assessment on the gloom lifting, then clearly the economy is going to be a good bit slower than we'd like. Relying on that--"animal spirits" is what Keynes called it--as the basis of the forecast concerns me. I understand why it is in there, and I don't have anything better to offer, but I am very uneasy that that's where we are. 

MR. STOCKTON. "We're expecting ongoing declines in investment in that sector and growth in capacity that for a second year will be the weakest on record since we have been constructing capacity measures."


Opinion: no
Prior discussion:
speaker: MR. FERGUSON.
text: So given my general responsibility for contingency work, I would be very comfortable taking the CACF off the table at this stage. Again, good work has been done on this; our understanding of it has moved beyond where we were when we put that idea on the table. So in conclusion, I think Ginnie Maes should be where most of the staff work is directed. All the other alternatives I would say can now be delayed for some time. 
speaker: CHAIRMAN GREENSPAN.
text: President Minehan. 

MS. MINEHAN. "I'm in favor of what Governor Ferguson, Governor Kohn, and President Moskow said."

Full utterance: I'm in favor of what Governor Ferguson, Governor Kohn, and President Moskow said. I'd do the work on the Ginnie Maes first and learn from our ACF effort but put it on the shelf. If people have comments on it, fine, submit them. Also, when we put the staff studies out, they do mention an ACF type facility, though nowhere near 137 pages are devoted to it as in the paper we received recently! [Laughter] It is mentioned, so perhaps we'll get some response from those in academia or others on how they see some of those facilities. I think that might be instructive.

Opinion: yes
About monetary policy: no
Prior discussion:
speaker: MR. MOSKOW.
text: One was the downward adjustment to prices, and an unexpected weakness in aggregate demand was added to it. I have two questions about this. First, if we didn't have the aggregate demand shock but had only the downward shock in prices, what would the deflation scenario look like in terms of its impact on output? Also, one channel of influence on output, of course, would be higher real interest rates as a result of deflation. But are there other channels through which deflation would have effects on output as well? 

MR. STOCKTON. "But essentially the model doesn't want to push the economy into deflation without combining a number of these different kinds of shocks."


Opinion: no
Prior discussion:
speaker: MR. KOHN.
text: The markets are going to act in a more stabilizing way even when they don't agree with us, which is fine. But they need to know what we're thinking about in order to do a good job of assessing how the 800-pound gorilla in the money markets views the outlook. So, while I agree that we need to give more thought to it, I haven't given up entirely on trying to do something in terms of how we communicate about the future. Thank you. 
speaker: CHAIRMAN GREENSPAN.
text: Governor Gramlich. 

MR. GRAMLICH. "[Laughter] So I have that adverse mental association with the whole concept."

Full utterance: Thank you, Mr. Chairman. I support both parts of your recommendation. I think if we did anything other than keep the negative bias today, the funds market would go even crazier, and long rates would back up even more. I just don't see how we can do that. I'm probably the only one here who is not particularly looking forward to the September discussion [laughter] because I'm not sure I see my way through it. I guess I should confess that it's partly because my wife has been telling me for forty years now that I don't communicate particularly well. [Laughter] So I have that adverse mental association with the whole concept. I just find this a very hard issue to address. First, on the statement itself I have expressed my reservations before about adding up or balancing the output risk and the inflation risk. I've always had that problem. Second, I think the phrase "the probability, though minor, of an unwelcome substantial fall in inflation" may have served us well a couple of months ago, but as the probability of this substantial fall gets more and more minor, that sentence is going to have to be changed. And I'm not sure how to do that. The third problem is that any time we change anything in this paragraph, even a comma, there is a huge market reaction. The way the market reacts even to minor inflections of what we say scares me. So I think that's a real problem in trying to communicate and be honest about what we think. Along with many of you, I share the reluctance to pre-commit to a future policy course. However, I'm on the side of Governors Bernanke and Kohn in feeling that we probably do have to get into this issue a little in terms of explaining our assessment of the outlook. At some point, the way we do it now is not going to work--and maybe that point has come already--but I just don't know how best to change our approach. This whole process takes place in a fishbowl. So I find the topic very difficult and depressing, and I don't look forward to discussing it. Sorry.

Opinion: yes
About monetary policy: no