Bluebook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. Content last modified 6/05/2009. (CONFIDENTIAL FR) February 5, 1971. MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM CONFIDENTIAL (FR) February 5, 1971. MONETARY AGGERGATES AND MONEY MARKET CONDITIONS Recent developments (1) Late January data are still partially estimated, but there appear to have been sizable shortfalls from the expected growth path for the narrowly defined money supply (M1) in the last two weeks of the month, as shown in the table on the following page. It now appears that growth of the money stock for all of January was at about a 3 per cent annual rate, below the 5-1/2 per cent rate projected at the time of the last Committee meeting. In contrast to the shortfall in M1, more broadly defined money supply (M2 ) increased somewhat more than expected in January, as time and savings deposits other than large CD's grew more rapidly in January than in December. The bank credit proxy grew in January nearly as rapidly as expected at the last meeting. (2) The sluggish January growth in the money supply occurred despite efforts of the Trading Desk to achieve a faster rate of growth by fostering easier money market conditions. For most of the period since the last FOMC meeting, the daily effective Federal funds rate was in a 3-7/8--4-1/4 per cent range, with heavy U.S. Government security dealer positions built up in consequence of the refunding exerting some upward pressure on the funds market. In the weeks immediately following the last Committee meeting the Desk was aiming at a Federal funds rate around 4-1/4 per cent, somewhat below the most typical rate prevailing Recent Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) Narrowly Defined Money Supply (M1) Broader Based Money Supply((M2) Adjusted Credit Proxy Indicated at Last Meeting 2/ Actual Results Indicated at Last Meeting2/ Actual Results Indicated at Last Meeting2/ Actual Results Month December 1970 214.7 214.6 419,0 419.0 331.1 331.2 January 1971 215.7 215.1 422.7 423.4 334.5 334.2 214.1 216.1 216.4 215.4 215.3 215.0 214.6 420.0 421.8 423.4 424.1 422, 2 422. 2 423.3 424.1 331.5 332,6 334.4 337.0 333.3 332.5 334.0 335.4 217.3 216.1 425.5 427.4 337.9 335.9 Week ending Jan. 6 215.4 Feb. 3 % Annual Rates of Change Fourth Quarter, 1970 3.6 3/ 3.4 3/ January over December 5.5 2.8 % Annual Rates of Change 9.2 10.5 9.2 12.6 % Annual Rates of Change 8.1 12.5 8.3 12.5 0.4 10. 9- 1 MI plus bank time ana savings deposits other than large Ct's. 2/ 3/ 4/ Alternative B path of previous Bluebook. 3.8 per cent annual rate for fourth quarter average over third quarter average. Adjustment. to correct for the effect on bank credit of Ex-In Euro-dollar issue would raise this to 11-1/2 per cent. -3before the meeting. When the large shortfall of M1 below path for the week of January 20 was finally confirmed (around January 28), the Federal funds target was lowered to 4 per cent or a shade lower, and most recently, with M1 data for the final week of January also coming in low, the target was lowered to 3-3/4 per cent. In the latest two statement weeks, net borrowed reserves averaged around $30 million and borrowing at the Federal Reserve $320 million. This compares with $310 and $375 million, respectively, for the preceding two statement weeks. (3) The lower Federal funds rate in January, along with the further cuts in the discount rate and in the commercial bank prime rate, strengthened market expectations of further rate declines. In consequence, seasonally enlarged flows of funds to banks and other financial institutions were invested aggressively, and both short- and long-term market interest rates dropped sharply. The 3-month Treasury bill, for example, was most recently bid at around 4 per cent, about 65 basis points below its level at the time of the meeting. Long-term rates are about 35-70 basis points below levels at the time of the last meeting, after taking account of the back-up in such yields over the past week. (4) In the generally strong market environment, the Treasury's quarterly financing operation, which included a pre-refunding of $13.5 billion of November 1971 and February 1972 maturities, was highly successful. A total of $10.8 billion of the $19.5 billion of publicly held eligible issues were exchanged, with $5.2 billion going into the new 4-1/2 year, 5-7/8 per cent note and $5.6 billion into the 7-year,6-1/4 per cent issue. Attrition on the $6.0 billion of February and March 1971 -4maturities totalled only $1.1 billion, or 18 per cent, absence of a short-term anchor issue in dealer positions in despite the the refinancing. Most recently, coupon issues maturing in more than a year totaled $1.7 billion, although dealers have reported fairly good progress in distributing their awards of about $1.1 billion of new issues. (5) The following table summarizes seasonally adjusted annual rates of change in major financial aggregates for selected periods. 1970 (Dec. over Dec.) Total Reserves 6.4 Nonborrowed Reserves Third Quarter (Sept. over June) Fourth Quarter Dec. over Jan. 1971 over Dec. Sept. 1970 19.1 6.6 12.2 24.4 9.4 9.0 Concepts of Money M1 (Currency plus demand deposits 1/) 5.4 M2 (M1 plus time deposits at commercial banks other than large CD's) 8.2 11.0 9.2 12.6 M3 (M2 plus deposits at thrift institutions) 8.0 10.7 9.7 15.5 Total member bank deposits (Bank credit proxy adj.) 8.3 17.2 8.3 10.9 Loans and investments of commercial banks 7.4 13.9 6.1 13.8 2.8 6.1 Bank Credit Short-term market paper (actual $ change) Large CD's $14.8 $ 8.5 $4.3 $ 1.1 Bank-related commercial paper N.S.A. - 1.9 - 3.0 - 2.3 -0.3 Nonbank commercial paper 2.1 - 1.2 1.5 - 0.1 1/ Other than interbank and U.S. Government. 2/ Based on month-end figures. Includes loans sold to affiliate and branches. e --Estimated. N.S.A.--Not seasonally adjusted. NOTE: All items are based on averages of daily figures, except for data on total loans and investments of commercial banks, commercial paper and thrift institutions--which are either end-of-month or last Wednesday of month figures. Prospective developments (6) The further shortfall of M 1 in January relative to FOMC expectations indicates that a greatly accelerated rate of growth in M 1 will be required in February and March if the FOMC still wishes to attain the March average level of the money stock that was targeted at the previous two FOMC meetings. With January behind us, there is obviously less time to make up a shortfall, and as a result a considerable amount of reserves would have to be supplied over a relatively short period, with a consequent sharp easing effect on money market conditions. A more gradual make-up of recent shortfalls would require a less rapid provision of reserves and less of an easing of money markets. Two alternatives for making up the shortfall in M1 are indicated below in an effort to clarify policy alternatives for the Committee. A third alternative, which assumes no change from the money market conditions most recently prevailing and involves no deliberate further effort to make up for past shortfalls in M 1 , is presented at a later point. (7) The table below summarizes two alternative paths for making up the M1 shortfall. The first column--called alternative A--makes up the shortfall by March and continues with a 6 per cent rate of growth in the second quarter. The second column, alternative B, shows a path which does not make up the shortfall by March; in other words, this alternative does not retain as a target the March average level of M 1 set at the previous two FOMC meetings. It does assume, however, that growth in M 1 would be greater than 6 per cent in the second quarter as the shortfalls of the fourth quarter and January are made up over a longer period. The particular path would reach the same average level in June for M 1 as indicated for alternative A. And the growth rate over the 9 months from September 1970 to June 1971 would be just under 6 per cent. In either case the growth rates for the second quarter and the June level could, of course, be greater if the Committee should decide that a trend growth rate of more than 6 per cent is desirable for the longer run. Alternative A Alternative B December 214.6 214.6 March 218.8 218.3 June 222.1 222.1 End of Quarter Level (Mo. Ave.) (Billions of $) Quarterly Growth Rate (Per cent annual rate) 1st Qtr. (March over Dec.) 8 1/ 7 2nd Qtr. 6 7 (June over March) 1/ This growth rate is 8 per cent, rather than the 7-1/2 per cent of the last FOMC meeting, because of a small downward revision in the December average level of the money supply. Thus, starting from a somewhat lower base, a somewhat higher growth rate is required to attain the previous desired March level. (8) The table on the next page shows monthly levels and growth rates for all of the monetary aggregates that are believed to be consistent with the M 1 quarterly pattern shown for alternatives A and B in paragraph (7). (9) To achieve either alternative A or B, an easing of the money market appears to be required between now and the next meeting of the Committee, for reasons indicated in paragraph (6). The alternative A pattern of growth in monetary aggregates--which contemplates about a Alternative Paths of key Monetary Aggregates--Monthly and Quarterly (Seasonally adjusted, billions of dollars) Concepts of Money M1 Adj. M2 Credit Proxy Total Reserves Alt.A Alt.B Alt.A Alt. B Alt.A Alt. B 214.6 214.6 419.0 419.0 331.2 331.2 29.9 29.9 January 215.1 215.1 423.4 423.4 334.2 334.2 30.2 30.2 February 217.0 216.8 430.7 430.5 336.9 336.7 30.6 30.6 March 218.8 218.3 436.1 435.6 341.5 340.7 30.9 30.8 June 222.1 222. 1 451.3 451.3 351.1 Per Cent Annual Rates of Growth 31.4 31.2 2.8 12.6 12.6 10.9 12.2 12.2 9.5 14.5 14.5 Alt.A Alt.B 1970 December 1971 January 2.8 352.3 10.9 February 10.5 9.5 20.5 20.0 March 10.0 8.5 15.0 14.0 16.5 14.5 10.5 9.0 8.0 1st Q 1971 8.0 7.0 16.5 16.0 12.5 11.5 12.5 11.5 2nd Q 1971 6.0 7.0 14.0 14.5 12.5 12.0 8.5 5.5 -910 per cent annual rate of growth in M1 for February and March together --may entail a much lower Federal funds rate, perhaps ranging around 2-1/2 per cent, with the 3-month bill rate dropping to around 3 per cent. And the net free reserve position of member banks is likely to average $150 million or a little more, as excess reserves build up, given the low interest rates. It would be anticipated, however, that by early spring, the Federal funds rate would have to rise rather sharply--to around 4-1/2 --5 per cent, with a concurrent snapback in bill rates--as reserves are provided less generously in order to move down to the assumed longer-run growth rate, typified in alternative A by a 6 per cent growth in M1 for the second quarter. (10) Since the alternative B pattern of growth in monetary aggregates involves a somewhat less rapid February--March annual growth rate for M1 of 9 per cent, attainment of this rate would seem to involve a smaller reduction in the Federal funds rate than under alternative A--perhaps a funds rate in a 3--3-1/2 per cent range--and a net free reserve position of $50-$150 million. The accompanying drop in the 3- month Treasury bill rate might be into a 3-1/4--3-3/4 per cent range. Because of the more gradual approach to making up the shortfall in M 1 under alternative B, a sizable later snapback in money market rates would not be expected. Still, in early spring the Federal funds rate and the bill rate might be somewhat above the upper end of these ranges as reserves are adjusted to bring growth in M1 onto a 7 per cent growth path for the second quarter as a whole. -10- (11) The weekly paths for the monetary aggregates that would be consistent with the monthly patterns for alternatives A and B between now and the next meeting are shown in the table on the next page. (12) The rate of inflow of time deposits other than large CD's is expected to slacken later in February and March, following the unusually rapid growth of the previous two months. A number of banks have adjusted downward interest rates offered on consumer-type time and savings accounts. This tendency is likely to become more widespread, especially under alternative A, and may serve, along with an increase of consumer spending as projected in the Green Book, to moderate savings inflows. However, given the very rapid growth in time and savings deposits other than large CD's that has already occurred and taking account of the expected increase in M1, the rate of growth in M 2 (M1 plus time and savings deposits other than large CD's) is expected to be a very sizable 16-1/2 per cent annual rate in the first quarter. Under alternative B, the rate of growth in M 2 would be expected to be only slightly less rapid than under alternative A. These estimates of M2 behavior in the future are highly problematical because of uncertainties about the timing and extent of bank cuts in offering rates on consumer-type accounts and the effect of this on savers in a period of declining market interest rates. (13) Growth in the adjusted credit proxy (rates of growth are shown for alternatives A and B in the table on p. 8) will be influenced by continued more moderate growth in large negotiable CD's following the sharp expansion of earlier months. Banks have dropped offering rates sharply, and the spread of CD rates over bill rates has narrowed. A pick-up in busi- ness loan demand might make banks more willing borrowers through CD's, but bank -11Alternative Weekly Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) Concepts of Money M1 Alt.A M2 Alt. B Alt.A Adj. Credit Proxy Alt. B Alt.A Alt.B Total Reserves Alt.A Alt.B 1971 January 27 214.6 214.6 424.1 424.1 335.4 335.4 30.2 30.2 216.1 216.1 427.4 427.4 335.9 335.9 30.3 30.3 10 216.4 216.4 428.9 428.9 336.2 336.2 30.5 30.5 17 217.3 217.2 430.8 430.7 336.5 336.4 30.7 30.7 24 217.3 217.0 431.8 431.5 337.9 337.5 30.6 30.6 3 217.5 217.1 433.1 432.7 337.3 336.8 30.8 30.8 10 218.5 218.0 437.7 434.2 339.3 338,6 30.8 30.7 p February 3e March p -e-- Preliminary Estimated from partial data. -12liquidity is substantial enough so that they could easily accommodate borrowers by diverting funds from securities. Bank-related commercial paper is expected to continue running off at about the recent $50-$100 million per week rate. We have assumed only minor further declines in Euro-dollar borrowings. (14) The preceding discussion has indicated that the money market would probably have to be eased significantly further in order to make up for recent shortfalls in M1. The Committee, however, may wish to consider a policy of stabilizing the money market at around recently prevailing conditions, given the sizable growth in M 2 and the adjusted credit proxy and the recent sharp drop in interest rates. Prevailing money market conditions can be taken to include a Federal funds rate around 3-3/4--4 per cent, which would reflect the most recent objectives of the Trading Desk; the 3-month bill rate might be in a 3-3/4--4-1/4 per cent range. Assuming such conditions are maintained, monetary aggregates for the remainder of the first quarter and for the second quarter, as well as weekly paths, are shown in the accompanying table. (15) conditions, With a policy of keeping to prevailing money market M1 termed alternative C, growth in the first quarter would be at a 6 per cent annual rate and no pick-up from this rate would be anticipated in the second quarter. Thus, if the staff is correct in this projection, the shortfalls in M1 growth for the fourth quarter and January would not be recovered. however, A relatively rapid M1 growth would, be expected in February and March as the effects of recent -13Paths of Key Monetary Aggregates-Monthly and Quarterly (Alternative C) (Seasonally adjusted, billions of dollars) Concepts of Money M1 M2 Adj. Credit Proxy Total Reserves 1970 214.6 419.0 331.2 29.9 January February March 215.1 216.7 217.9 423.4 430.4 435.2 334.2 336.6 340.1 30.2 30.6 30.8 June 221.1 450.3 349.1 31.0 December 1971 Per Cent Annual Rates of Growth January February March 2.8 9.0 6.5 1st Q 1971 2nd Q 1971 6.0 6.0 12.6 20,0 13.5 10.9 8.5 12.5 12.2 14.5 6.5 15.5 10.5 10.5 11.0 3.5 14.0 Paths of Key Monetary Aggregates-Weekly (Alternative C) 1971 January February March 10 17 24 214.6 216.1 216.4 217.1 216.8 3 10 216.9 217.8 27p 3 e 428.9 43..6 431.3 335.4 335.9 336.2 336.3 337.3 30.2 30.3 30.5 30.7 30.6 432.5 434.0 336.5 338.2 30.8 30.7 424.1 427.4 p -- Preliminary e -- Estimated from partial data. -14interest rate declines gradually have an impact on demand fbr money and on the assumption that the staff projection of a rapid GNP growth in the first quarter materalizes. (16) With the money market unchanged from recent easier con- ditions, long-term interest rates may show some further declines, on balance, over the coming weeks, as the sizable corporate and municipal calendar and the overhang of new Treasury financing issues is worked off. If money market conditions ease further--as would appear to be necessary under alternatives A and B--long-term yields could be expected to decline more sharply as banks make further aggressive efforts to attract corporate borrowers and as investors react in anticipating further rate declines. Possible directive language (17) This section presents possible language for the second paragraph of the directive for the three alternative policy courses discussed above. (18) Alternative A. As noted earlier, this alternative is proposed for possible use if the Committee decides that the shortfall in January from the path associated with its earlier first-quarter target growth rate (which in itself allowed for a make-up of the shortfall that occurred in the fourth quarter) is to be made up in the remaining part of the first quarter. "To implement this policy, the Committee seeks to promote accommodative ccnditions in credit markets; GREATER GROWTH IN -15THE NARROWLY DEFINED MONEY STOCK, MAKING UP THE SHORTFALL [DEL: FROM THE DESIRED GROWTH PATH THAT HAS DEVELOPED: andmoderate] CONTINUED SUBSTANTIAL expansion in OTHER monetary and credit System open market operations until the next aggregates. meeting of the Committee shall be conducted with a view to maintaining bank reserves and money market conditions the of account taking consistent with those objectives [DEL: forthcoming Treasury financing]." The indicated language with respect to the aggregates (i.e., the reference to the "narrowly defined money stock, ' followed by a separate reference to "the other monetary and credit aggregates") is suggested to make clear (1) that it is with respect to M 1 that a shortfall is to be made up, and (2) that the Committee is also taking account of the behavior of key monetary aggregates other than M1. (19) Alternative B. This alternative is proposed for possible use if the Committee decides that past shortfalls are to be made up over a period extending through the second quarter, and that the target for growth of M1 in per cent. the first and second quarters should be set at 7 The Committee might choose such an approach in order to avoid the type of "whipsawing' of money market conditions that paragraph (9) suggests would be required to achieve annual rates of growth for M 1 of 8 per cent in the first quarter and 6 per cent in the second quarter. "To implement this policy, the Committee seeks to promote accommodative conditions in credit markets, GREATER GROWTH IN THE moderate]CONTINUED RAPID expansion NARROWLY DEFINED MONEY STOCK, AND [DEL: -16in OTHER monetary and credit aggregates. System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining bank reserves and money taking market conditions consistent with those objectives [DEL: financing]." Treasury forthcoming the of account As will be noted, the language of alternative B differs from that of alternative A only in the omission of the clause (following the reference to the narrowly defined money stock) reading "making up the shortfall from the desired growth path that has developed." Such a clause might be considered unnecessary in this alternative in light of the extended period over which the shortfall is to be made up. (20) Alternative C. As will be noted, this alternative is similar to the second paragraph of the directive issued by the Committee on December 15, 1970. It is suggested for possible use if the Committee decides not to seek to make up past shortfalls in M 1 even over the more extended time period, if doing so would require the degree of easing in money market conditions suggested by the analysis in paragraphs (9) and (10) above. "To implement this policy, [DEL: promote to seeks Committee the expansion moderate and markets credit in conditions accommdative aggregates.] credit and monetary System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining PREVAILING bank conmarket money] and reserves [DEL: ditions, the of account taking objectives, these with consistent [DEL: forthcoming financing] Treasury PROVIDED THAT MONETARY AND CREDIT -17AGGREGATES APPEAR TO BE EXPANDING AT LEAST AS FAST AS PROJECTED." The Committee may wish to have the proviso clause interpreted in terms of the projections of M1 (or of M1, M2, and the bank credit proxy) shown in the table on p. 13, based on the assumption of a continuation of prevailing money market conditions. The proviso clause--like that in the December directive--is formulated in a manner that would permit growth in the aggregates at rates higher than projected, but would call for easing of money market conditions to make up any shortfalls from projections associated with this alternative. CHART I STRICTLY CONFIDENTIAL (FR) 2/5/71 MONETARY AGGREGATES MONEY SUPPLY Revised Series ' I BILLIONS OF DOLLARS I I J1 I | MONEY SUPPLY IC T P I ADJUSTED CREDIT PROXY YI ADJ. CREDIT PROXY N D J '70 F '71 M TOTAL RESERVES - Actual -- Currently Projected --- Wkly., Indicated at FOMC Meeting (1/12/71) Consistent with 71/2% Money Supply Growth in First Quarter i (filli P9'69 I 1 . j I 1970 J ) I I i 1 1971 K - Lon-ger Run Path 2/5/71 CHART 2 INTEREST BEARING SOURCES OF BANK FUNDS BILLIONS OF DOLLARS TOTAL TIME AND TIME AND SAVINGS DEPOSITS OTHER THAN CD'S NONDEPOSIT SOURCES 1970 1971 CHART3 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS 1969 1970 INTEREST RATES Long-term 1971 1969 1970 1971 STRICTLYCONFIDENTIAL (FR) Table 1 PATHS OF KEY MONETARY AGGREGATES February 5, 1971 SEASONALLY ADJUSTED L L Period -- Adjusted Credit Proxy 1 Path as of Jan. 12 Money Supply M 2 3 Path of Current Proi Jan.12 S 4 Current Prol. ------------------------ TimeDeposits S Governme Demand Deposits 5 Path as of Jan. 12 6 Current Prol Time Deposits 7 Path as of Jan. 12 810 Current Prol -- TotalReserves Nondeposit Sources of Funds T 11 of Jan. 12 Current Prol ath of Jan. 12 12 Current Prol. Monthly Pattern in Billions of Dollars 1970: 1971: Sept. 324.5 324.5 212.8 212.8 218.5 218.5 16.5 16.5 29.2 Oct. Nov. Dec, 324.8 326.7 331.1 324,8 326.7 331.2 213.0 213.5 214.7 213.0 213.5 214.6 222.2 225.0 230.3 222.2 225.0 230. 4 14.2 12.7 11.6 14.2 12.7 11.6 29.4 29.5 29.9 Jan. p Feb. (proj.) Mar. (proj.) 334.5 334.2 336.6 340.1 215.7 217.5 218.8 215.1 216.7 217.9 234.6 239.3 242.2 235.4 240.6 244.4 10.7 10.6 10.6 10.1 8.5 8. 1 30.2 30.6 30.8 337.9 339.9 Annual Percentage Rates of Change--Quarterly and Monthly 1970: 1st 2nd 3rd 4th 1971: 1st Qtr. (pr oj. 1970: 1971: Qtr. Qtr. Qtr. Qtr. 0.5 6.5 17.2 8.1 0.5 6.5 17.2 8.3 5.9 5.8 6.1 3.6 5.9 5.8 6.1 3.4 1.4 14.1 32.2 21.6 1.4 14.3 32.2 21.8 -2.9 2.6 19.1 6.7 10.5 10.5 7.5 6.0 20.5 24.5 11.0 Sept. 9.7 9.7 5.7 5.7 29.8 29.8 27.5 Oct. Nov. Dec. 1.1 7.8 16.2 1.1 7.0 16.5 1.1 2.8 6.7 1.1 2.8 6.2 20.3 15.1 28.3 20.3 15.1 28.8 -1.9 3.6 18.4 22.5 24.0 14.5 26.0 26.5 19.0 12.2 14.5 6.5 Jan. Feb. Mar. (proj.) (proj.) 12.5 10.9 5.5 2.8 12.0 8.5 10.0 9.0 7.0 12.5 7.0 6.5 Weekly Pattern an Billions of Dollars 328.3 328.3 214.5 214.5 330.7 330.7 214.2 214.2 330.1 330.1 215.3 215.3 331.4 331.6 213.6 213.5 331.7 332.0 214.8 214.7 5.3 7.1 5.6 7.6 6.0 5.3 7.1 5.6 7.6 6.0 227.2 228.8 229.7 231.6 232.1 227.2 228.8 229.7 231.6 232.3 11.7 12.1 11.6 11.8 11.2 11.7 12.1 11.6 11.8 11.2 29.7 29.7 29.8 30.0 30.1 10.2 10.5 10.5 10.0 30.5 29.8 30.4 30.2 1970- Dec. 2 9 16 23 30 1971: Jan. 6 13 20 27 331.5 332.6 334.4 337.0 333.3 332.5 334.0 335.4 214.1 215.4 216.1 216.4 215.4 215.3 215,0 214.6 5.1 5.1 6.0 8.7 5.3 5.3 6.0 8.1 232.8 233.6 234.9 235.7 233.6 234.2 235.7 236.5 10.2 10.7 10.9 10.8 Feb. 3 pe 10 337.9 338.4 335.9 336.2 217.3 217.8 216.1 216.4 8.2 8.3 8.4 7.8 236.7 238.5 238.1 219.5 10.7 10.6 NOTES : Annual rates of change other than those for the past are rounded to the nearest half per cent. pe -- partially estimated. p - preliminary. 8.8 8.6 30.3 30.5 FR 712 - Table 2 CONFIDENTIAL (FR) February 5, 1971 AGGREGATE RESERVES AND MONETARY VARIABLES RETROSPECTIVE CHANGES. SEASONALLY ADJUSTED (Annual rates in per cent) _____ Reserve Aggregates 1 Total Reserves Peri Perad __D Monetary Variables 2 3 Total Member Nonborrowed Reserves Bank _ 4 Adjusted 5 Credit Proxy Addenda Money Supply 7 Privateie 6 Total 8 9 Deposits Private Currency Demand _eposits Adjusted Thrift 10 Nonbark Instit. Commercial Deposits Paper Deposits AntaDally__ 1968 + 7.4 + + + 2.4 + 5.1 +18.4 n.a. - 1.2 + + 6.5 + 5.4 + 4.7 - 3.5 + 1.2 + - 6.6 + 4.8 + 1.9 n.a. +28.3 + 3.5 +12.9 + 5.9 + 4.8 + 7.8 + 4.6 + 5.3 + 4.7 + 7.8 +27.9 + 4.3 +10.6 +12.8 +1.7 - 9.4 + 0.1 -4.3 + 2.0 + 0.8 + 1.6 + 4.5 + 6.2 + 0.4 + 2.3 + 1.4 +31.6 +23.2 + 0.6 + 6.0 +24.1 +15.1 + 0.5 + 6.5 +17.2 + 8.3 + 5.9 + 5.8 + 6.1 + 6.1 + 9.4 3.4 + 5.8 +5.3 + 5.3 + 6.7 + 2.7 + 1.4 +14.1 +32.2 +21.8 + 1.7 + 6.9 +10.0 +11.0 +17.8 +7.5 -16.2 +20.4 + 0.8 + 0.6 + 2.6 + 0.8 + 3.7 + 1.9 +27.4 6.0 3.0 9.5 + 9.0 - 4.0 +11.8 + 8.3 - 3.7 2.4 - + 7.8 - 1.6 1970 + 6.4 1st Halif 196 1st Half 1969 2nd Half 1969 + - 0.7 1st Half 1970 2nd Half 1970 - 0.2 +13.0 +17.1 - - 3.9 + 7.8 + 3.1 + 5.4 + + 1969 + 1.9 n.a. +r.a. 3.5 4.6 + 3.3 +20.0 6.0 + 6.3 5.1 7.9 + 6.3 + 3.4 + 7.6 +11.1 - 5.0 0.1 Quarterlv 3rd Qtr. 1969 4th Qtr. 1969 1st 2nd 3rd 4th Qtr. Qtr. Qtr. Qtr. 9.3 + 1.4 1970 1970 1970 1970 4.8 - 0.1 - 2.9 + 2.6 0.4 - +19.1 + 6.6 + 4.1 +24.4 + 9.4 + 6.3 +12.1 MOnth ly 1969: 1970: Dec. + 9.9 - 8.0 - 6.8 + 1.2 +12.9 +11.2 + 2.8 + 6.6 +12.6 +26.2 +13.8 + + 5.8 +13.7 - 1.2 + 7.0 +10.3 +15.3 + 2.5 +10.5 + 3.0 + 2.2 +19.7 +10.9 +11.4 + 8.1 + 5.3 + 7.0 +34.4 +18.9 -30.0 -16.1 +48.8 +40.1 +22.7 +29.2 +19.0 +18.1 +23.2 + 9.7 + 5.7 + 7.5 + 2.5 + 4.4 + 8.9 + 6.6 +35.6 +28.8 +29.8 +13.3 + 6.1 +10.5 -87.5 -7.2 +49.6 + 1.1 + 7.0 +16.5 + 1.1 + 2.8 + 6.2 - 0.7 +20.3 + 4.4 +10.1 +13.1 +21.4 + 2.2 + 6.6 +15.1 +28.8 +10.5 + 9.2 +13.0 +32.3 -28.7 +58.0 +25.4 -19.0 + 6.2 +16.8 July Aug. Sept. + 6.0 -23.3 Oct. - 1.9 Nov. Dec. + 3.6 1-18.4 +27.5 - NOTE: + 5.2 + 5.2 + 7.8 +21.3 -13.9 + 0.5 May June __ _ __ - t __ _ _ - 4.2 - 8.0 +14.0 - +22.8 _ 3.3 + 9.4 - 4.1 +12.3 + 7.2 -15.6 + 7.5 April + 12.7 - - + 3.1 -12.0 Jan. reb. March + -0.3 _ I_ __ +10.7 4.5 _ __ 3.5 5.5 _ ___ 9.9 + 5.2 + + 2.3 6.8 + 5.7 L- + 7.5 + 4.9 + 4.9 L ±I __ _ _ _ _. _ _ _ _ 4.2 _ LL 712L E Aggregate reserve series have been adjusted to eliminate changes in percentage reserve requirements against deposits, but reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. CONFIDENTIAL (FR) Table 3 AGGREGATE RESERVES AND MONETARY VARIABLES February 5, 1971 SEASONALLY ADJUSTED (In billionsof dollars) 1969: 27,530 27,401 27 402 26,275 26,214 26 383 27,334 27,161 27,144 288.0 285.3 285.7 203.1 202.6 202.8 45.0 45.2 45.3 158.1 157.4 157.6 198.1 195.4 194.8 184.0 182.9 182.8 305.7 303.8 304.2 Nov. Dec. 27 354 27 783 27,928 26,210 26 538 26,806 27,129 27.548 27,707 283.5 285.8 285.8 203.2 203.5 203.6 45.6 45.9 46.0 157.6 157.6 157.7 194.2 194.0 194.6 182.6 182.9 183.4 302.2 305.5 305.7 Jan. Feb. March 28,001 27,722 27,723 26.966 26,615 26,782 27,823 27,523 27,536 284.8 282.9 286.2 205.2 204.5 206.6 46.2 46,4 46.7 159.0 158.1 159.8 193.3 193.5 195.8 182.7 182.9 183.8 304.8 303.4 306.1 April May June 28,216 27,890 27,q02 27,350 26,916 27,056 28,046 27,692 27,713 290.2 289.1 290.5 208.3 209.2 209.6 47.1 47.7 47.8 161.2 161.6 161.9 198.5 200.3 202.2 185.6 187.1 189.0 309.6 309.3 311.1 July Aug. Sept. 28,041 28 585 29,240 26,694 27,780 28,708 27,896 28,408 29,024 296.0 303.2 308.0 210.6 211.8 212.8 48.1 48.2 48.2 162.5 163.7 164.6 208.2 191.3 194.2 196.8 315.8 321.9 324.5 Oct. Nov. Dec. 29,385 29,474 29,925 28,928 29,033 29,584 29,134 29,233 29,703 310.6 314.0 319.6 213.0 213.5 214.6 48.5 48.7 48.9 164.5 164.8 165.7 222.2 199.1 201.1 204.4 324.8 326.7 331.2 29,714 29.719 29,817 30,007 30,133 29,299 29,234 29.343 29,671 30,102 29,322 29,433 29,732 29,821 29,899 316.6 318.6 318.6 319.8 320.8 214.5 48.6 48.9 49.0 49.1 49.0 165.9 165.4 166.3 164.4 165.8 227.2 228.8 229.7 231.6 232.3 24.7 25.4 25.8 26.3 26.7 202.5 203.3 203.9 205.2 205.6 328.3 330.7 330.1 331.6 332.0 31.0 29.8 29.7 29.4 30,524 29,812 30,400 36 218 30,052 29,610 29,835 29,939 30,005 30,306 29,873 323.1 322.0 323.5 325.3 215.4 215.3 215.0 214.6 49.2 49.1 166.2 166.2 165.9 165.3 233.6 234.2 235.7 236.5 26.8 27.3 27.4 26.9 206.8 206.9 208.3 209.6 333.3 332.5 334.0 335.4 30.5 30.7 30.3 30.6 July Aug. Sept. Oct 1970: 1970: be-. 2 9 16 23 30 Jan. 6 13 20 p 27 p mOTES: 29.714 214.2 215.3 213.5 214.7 49.1 49.3 213.2 218.5 225.0 230.4 30.9 requirements against deposits, but reserve requirements on EuroAggregate reserve series have been adjusted to eliminate changes in percentage reserve commercial paper are included beginning October 1, 1970. bank-related on requirements and dollar borrowings are included beginning October 16, 1969, bank-related commercial paper, and Euro-dollar Adjuqted credit proxy includes mainly total member bank deposits subject to reserve requirements, 71 Monthly data are daily averages except for nonbank commercial Weekly data are daily averages for statement weeks. borrowings of U.S. banks. paper figures which are for last day of month. Table 4 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) TMember Period Free reserves Excess reserves Total Banks Borrowin C ity Reserv e Major banks Other 8 N.Y. !Outside N.Y. g s Country Monthly (reserves weeks ending in): 1969--July August September October November December 1970--January February March April May June July August September October November December -1,045 266 1,311 89 250 364 608 - 997 744 995 '975 849 214 282 195 238 278 1,211 1,026 1,190 1,213 1,127 81 83 106 120 268 253 236 327 387 310 256 222 293 250 220 621 485 464 456 329 - 759 916 751 169 210 129 928 1,126 880 148 106 90 287 317 225 232 289 287 261 414 278 687 765 736 -1,134 706 374 274 199 84 - 178 159 171 183 175 235 193 210 264 865 924 907 1,317 881 609 467 409 348 227 165 140 218 143 101 12 42 37 331 241 289 460 278 115 40 17 16 119 228 217 348 273 274 313 293 265 188 290 261 291 187 119 102 57 30 45 35 263 34 1971--January p - 135 242 377 2 - 482 178 660 79 181 221 179 9 - 348 415 763 160 143 343 117 16 23 30 - 144 507 389 356 -47 272 500 460 661 89 75 103 93 77 79 224 258 325 94 50 154 Oct. 7 14 21 28 - 46 409 397 242 352 41 189 191 398 450 586 433 -P1 16 11 4 46 97 13 304 319 342 292 90 71 131 117 Nov. 4 11 18 25 - 105 163 166 360 318 282 164 76 423 445 330 436 11 69 -86 15 29 1 22 311 282 295 287 86 65 34 41 Dec. 2 9 - 38 154 417 136 455 290 86 -- 22 -- 300 263 47 27 16 - 279 120 399 55 48 268 28 23 30 - 114 164 211 434 325 270 39 -- 11 -- 250 245 25 25 1970--Sept. 1971--Jan. Feb. p - 6 13 20 p 27 p - 138 245 375 59 545 32 96 295 407 277 471 354 71 -82 26 55 -63 22 255 250 284 264 26 27 42 42 3 p - 1 282 283 -- -- 253 30 reliminary. Table 5 SOURCE OF FEDERAL RESERVE CREDIT Retrospective Changes (Dollar amounts in millions of dollars, based on weekly averages of daily figures) r Per od 1oEa fereeral.r~ oIatI -+--I 1969 (12/25/68 - 12/31/69) 1970 (12/31/69 - 12/30/70) -- .~. Reserve credit . I C1 +5,539 +3,351 - U,. Total - "' "niis noings +5,192 +4,276 securities Government ^" L/ urner +4,279 ( -) 43,220 (- 143) Repurchase I agreements + 707 +1,180 + - 206 124 Federal Agency Securities + - 67 63 Weekly. 1970--Sept. Oct. Nov. 2 9 16 ) (-- ) 23 ((- 30 (+ 346) 7 14 21 28 4 11 90) 256) (-(-(-(-- ) ) ) ) (-- ) + + + 84 14 12 + 73 (+ 214) (- 150) + 41 + 114 (-- + 152 + 137 1971--Jan. 6 13 20 27 Feb. 3 -- ~-- Figures in parenthesis - 73 30 24 7 64 (+ 97) (+ 46) (- 159) (+ 85) + + 51 59 13 (+ + 6 (- - 25 4 16 44 63 - 6 + 62 - 107 + 134 (+ 150) (- 244) (+ 244) I/ + + + 2 9 16 23 30 c + 13 + 27 - 12 - 38 + 49 (- 214) 18 25 Dec. ( -- ) 143) + + 74) II--- reflect reserve effect 6f match sale-purchase agreement. I r Bankers' acceptances + 35 - 28 Member banks borrowings + - 245 834 Table 6 MATOR SOURCES AND USES OF RESERVES Retrospective and Prospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) F a c t o r s a f f e c t i n s u p 1 y of r e s e r v e s Other nonmember Foreign Currency Federal Reserve rei(el Gold Treasury credit (excl. outside r Float deposits deposits and F.R. accounts gold loans and P banks ock / float) (Sig n in i ca t s e f o n r e. s erves ) Period = Change in total reserves = Bank use of reserves e Required Excess reserves reserves Year: 1969 (12/25/68 - 12/31/69 1970 (12/31/69 - 12/30/70 +5,539 +3,351 -2,676 -3,122 +1,150 2/ - 813 + 773 + 241 + 667 + 54 + 1 + + + 217 379 183 552 + + + - 20 4 6 15 - - 898 +1,448 +1,340 + 108 -1,655 +1,163 +1,257 - + + + + 153 324 49 124 321 + 40 + 237 328 11 + 94 Weekly1970--Sept. Oct. Nov. Dec. 2 9 16 23 30 833 - 210 7 14 21 28 + 20 + 174 + 576 - 10 + 4 9 - 311 - 4 11 18 25 - 382 + 482 - + 169 + 95 - 15 + 271 + 1 + 230 + 1 - 24 1 - 271 86 - 59 - 403 + 319 80 - 311 + 278 + 148 - 445 + + + + 78 109 156 + 127 2 36 - 118 88 17 + + 18 - 397 - 302 2 - 349 + 174 85 + 873 + 843 5 8 3 - 187 39 + + + + + 161 124 336 169 322 + 341 9 + + + 657 + 144 + 705 -1,008 + 111 + 188 - 385 - 3 I . I __ r 63 - 250 - 673 - 19 - 377 - 4 + 108 + 159 - 275 - 827 - 1 + 289 - 450 + 16 I + 75 + 206 8 - 16 - + For retrospective details, see Table 5. 2/ Includes $400 million in special drawing account, p - Preliminary. 1/ + 100 210 275 6 13 20 27 Teb. 14 45 + 16 23 30 1971--Jan. - -24 - 50 + 305 - 26 34 - - 130 at is 186 _ - 281 16 + 91 + 223 - 513 + 56 + 207 - 13 

Federal Reserve (1971, February 8). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19710209

@misc{wtfs_bluebook_19710209,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1971},
  month = {Feb},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19710209},
  note = {Retrieved via When the Fed Speaks corpus}
}