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) September 17, 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 September 17, 1971. CONFIDENTIAL (FR) MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) Growth in M 1 slowed sharply in August, both in relation relation to to the rapid expansion actually experienced in July and in the increase projected for August at the time of the last Committee meeting. Growth of M2 and the adjusted credit proxy also fell short of projections in August. Data for the first two weeks in September--with the second week still partly estimated--indicate that rates of expansion for the two money supply aggregates have continued to fall substantially short of expectations, whereas the proxy has moved somewhat above path. Recent Paths of the Key Monetary Aggregates (Seasonally adjusted, billions of dollars) M 2 M 1 Aug. 24 Path Actuals Aug. 24 Path Adjusted Proxy Actuals Aug. 24 Path Actuals Annual Rates of Growth, per cent July August 7.5 10. 1 3.2 7.2 7.0 4.8 12.0 8.0 10.7 Levels, billions of $ August 229.0 228.1 456.9 455.9 351.3 351.1 230.2 229.3 229.0 228.8 228.1 227.4 227.1 226.6 459.0 458.1 458.0 458. u 456.3 354.5 455.8 353.4 353.3 353.8 353.9 353.7 353.4 Week ending Aug. 25 Sept. 1 Sept. 8 Sept. 15p p/ Partly estimated. 456.1 456.0 352.6 -2(2) The slower August growth in M 1 and M 2 largely reflected a substantial weakness in private demand deposits at reserve city banks which may well have been associated in part with dollar outflows through foreign exchange transactions. (This conclusion is supported by the demand deposit ownership survey for August, which showed a sharp drop in that With a major portion of the resultant month in business demand balances.) dollar accumulations by foreign central banks being invested in special U.S. Treasury securities (which increased by $5.3 billion in August), U.S. Government deposits expanded, offsetting much of the slowdown in private demand deposits. (3) Immediately following the last FOMC meeting, Desk operations were directed toward attaining money market conditions that included a Federal funds rate in the neighborhood of 5-1/2--5-5/8 per cent. In early September, incoming deposit data showed that actual growth in key aggregates was falling short of projections, and the Desk became somewhat more accommodative in reserve provision. Unusual pressures developed in the money market during the Labor Day week, however, resulting from cautious bank reserve management over the 3-day week-end and possibly related to augmented Federal fund demands related to interest arbitrage between the domestic and Euro-dollar markets. Despite sizable reserve supplying operations on the part of the Desk, the average Federal funds rate was about 5-3/4 per cent in the Labor Day week. Most recently, with the aggregates showing further weakness, the Federal funds rate has dropped, and the Desk is now aiming at a rate in a 5-1/4--5-1/2 per cent range. (4) Over the past three statement weeks, the Desk has supplied more nonborrowed reserves than were indicated by the reserve paths consistent with the monetary aggregate targets adopted at the last meeting, as shown in the table on the next page. This occurred despite a slight reduction in required reserves on balance. With the greater provision in nonborrowed reserves, member banks' net borrowed reserve position was less taut than projected--with excess reserves somewhat higher than projected and borrowings at the discount window considerably lower. Total reserves turned out to be somewhat above path on balance. Compared to a reserve path adjusted for the unanticipated reductions in reserves required against U.S. Government deposits (as shown by the numbers in parentheses in the table), the attained levels of total and nonborrowed reserves are even higher relative to path. (5) In securities markets, the initial exuberance following announcement of the new economic program faded somewhat in early September. Treasury bill rates, wnich had previously declined sharply as a result of neavy foreign official demands, reversed course in early September as foreign demands abated and as earlier market expectations of an easing in tne Federal funds rate failed to materialize. Most recently, as the money market has turned more comfortable, bill rates have stabilized with the latest bid on the 3-month bill a little and bond yields rose after early September, under 4-3/4 per cent. partly reflecting the develop- ment of a wait-and-see attitude among investors regarding phase II President's economic program. bond sector where a build-up in Note of the The adjustment was largest in the corporate the forward calendar of new issues and an overhang of dealer inventories created by over-aggressive pricing of earlier Reserve Aggregates: August 24 Paths vs. Actual (Seasonally unadjusted, in millions of dollars) Statement Week ending Actual minus Aug. 24 path Actual August 24 Path 30,531 29,823 30,186 345 708 30,466 (30,504) 29,666 (29,704) 30,216 (30,254) 250 800 65 (27) 157 (119) - 30 (-68) 95 - 92 30,869 30,104 30,645 224 765 30,915 (30,807) 30,115 (30,007) 30,690 (30,502) 225 800 - 30,881 30,424 30,615 266 457 30,792 (30,781) 29,992 (29,981) 30,567 (30,556) 225 800 89 (100) 432 (443) 48 (59) 41 -343 September 1 Total reserves Nonborrowed reserves Required reserves Excess Borrowings September 8 Total reserves Nonborrowed reserves Required reserves Excess Borrowings 46 (62) 11 (97) 45 (63) 1 35 September 15 Total reserves Nonborrowed reserves Required reserves Excess Borrowings NOTE: Figures in parenthesis reflect adjustment of the path for unanticipated changes in U.S. Government deposits. offerings had market. substantially weakened the technical position of the The market atmosphere improved following comments by the President at his press conference on Thursday which were taken to presage a relatively tough phase II wage-price program. Recent Interest Rates on Market Securities Series Rate August 13 Levels (Per cent per annum) September Subsequent Low 17 Short-term 3-mo. Tres. Bill 3-6 mo. Finance Paper 60-89 Day CD's 5.15 5.50 5.63 4.44 (8/31) 6.68 7.97 6.03 6.07 (9/8) 7.21 (9/10) 5.38 (8/31) 5.13 (8/25) 4.72 5.38 5.50 Long-term 10-yr. U.S. Treasury New Issue Corps (Aaa basis) Municipals (Bond Buyer) 5.36 (9/10) 6.12 7.56 5.38 (6) The following table summarizes developments in the major financial aggregates for selected recent periods: 4th and 1st Qtrs. combined (March over Sept.) Second Quarter (June over March) 8.9 6.6 7.6 10.3 5.3 1.5 6.2 11.3 6.6 M2 (M1 plus time deposits at commercial banks other than large CD's) 13.7 12.6 6.0 M 3 (M2 plus deposits at thrift institutions) 14.6 14.8 8.7 9.7 6.5 9.4 10.5 7.4 10.3 Large CD's $ 6.1 $ 0.7 $ 1.8 Bank-related commercial paper N.S.A. - 2.9 0.0 n.a. Nonbank commercial paper - 0.4 - 0.9 n.a. Total Reserves Nonborrowed Reserves August over June Concepts of Money M 1 (Currency plus demand deposits 1/) Bank Credit Total member bank deposits (Bank credit proxy adj.) Loans and investments of commercial banks 2/ Shcrt-term market paper (Actual $ change in billions) Other than interbank and U.S. Government. Based on month-end figures. Includes loans sold to affiliates and branches. 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 1/ 2/ paper and thrift institutions--which are either end-of-month or last Wednesday of month figures. Prospective developments Financial relationships are still bedevilled by uncertainties (7) related to how the new economic program will evolve; in particular, concern focuses on phase II of wage-price policies and the outcome of international negotiations on foreign exchange rates and related matters. A disappointing follow-through for phase II would probably reverse the recent improvement in market and public psychology and lead to substantial upward pressures on interest rates. through. We have assumed, however, a generally effective follow- In the international sphere the timing of the return-flow of the sizable speculative outflow of dollar funds is a major uncertainty. We have assumed no significant return at least between now and year-end. (8) Two alternative sets of operating specifications for Committee consideration are summarized in the text table below. The specifications in the first column can be drawn upon for the policy directives A or B, as explained in the section on possible directive language beginning on page 12. The table on the next page shows monthly paths for the spectrum of monetary aggregates, while two tables attached at the end of the text contain weekly paths for the monetary aggregates and more detail on aggregate reserves thought to be consistent with the two paths. Federal funds rate Member bank borrowings 3-month bill rate Growth in (SAAR) M1 September October 3rd Qtr. 4th Qtr. 2nd Half Alt. A (or B) Alt. C 5--5-5/8% 4-1/2--5% $400-$700 million 4-5/8--5-1/4% 1-1/2% 4-1/2 5 3-1/2 4 $200-$400 million 4-1/4--4-5/8% 1-1/2% 5-1/2 5 4-1/2 4-1/2 Alternative Monthly and Quarterly Paths of Key Monetary Aggregates M1 M2 Alt. A(B) Alt. C Alt. A(B) Alt. 228.4 229.3 229.9 230.3 228.4 229.5 230.4 231.0 458.0 460.5 462.4 464.4 458.0 460.8 463.4 465.9 C 1971 September October November December Per Cent Annual Rates of Growth September October November December 1.5 4.5 3.0 2.0 1.5 5.5 5.0 3.0 5.5 6.5 5.0 5.0 5.5 7.5 7.0 6.5 3rd Q. 1971 4th Q. 1971 5.0 3.5 5.0 4.5 6.0 5.5 6.0 7.0 Adjusted Credit Proxy Alt. A(B) Alt. C September October November December 353.4 355.2 358.0 357.3 Total Reserve Alt. A(B) Alt. 353.4 355.6 359.2 359.1 32.1 32.1 33.3 32.2 32.1 32.2 32.4 32.4 Per Cent Annual Rates of Growth September 8.0 8.0 October 6.0 7.5 November 9.5 December - 2.5 - 17.0 - 17.5 1.0 1.0 12.0 6.5 8.5 0.5 - 2.5 -- 3rd Q. 1971 9.0 9.0 11.0 11.0 4th Q. 4.5 6.5 1.0 3.0 1971 C -9(9) As compared with the first seven months of the year, the growth in M1 is expected to continue at a sharply reduced rate between now and year-end--particularly if money market conditions do not ease significantly from around prevailing levels--as the lagged effects on domestic cash demands of earlier higher short-term interest rates take hold and as precautionary demands for cash are reduced further in the wake of the President's program. Under alternative A--which contemplates a Federal funds rate in a 5--5-5/8 per cent range--the annual rate of growth in M1 is likely to be only about one or two per cent in September and around 3-1/2 per cent for the fourth quarter. A somewhat more rapid growth rate is currently anticipated from September to October mainly in consequence of an expected drop in U.S. Government deposits from their unusually high midSeptember level. Under alternative C, money supply growth would be expected to be a little more rapid in the fourth quarter than under alternative A. In the first quarter of next year, growth in M1 would be expected to be more rapid under either alternative, as transactions demands for cash--which would rise along with projected nominal GNP growth in the fourth quarter -- strengthen further. The pick-up could be quite modest under alternative A, however, while under alternative C the cumulative impact of lower interest rates could lead to a return to growth rates of around 6 per cent or so. (10) With respect to interest rates, if the Federal funds rate range stays in a 5-1/4--5-1/2 per cent bill rates might back up somewhat further over the next several weeks and exert upward pressure on other short-term -10- rates. This would be especially likely if the Treasury decides--as we have assumed it will--to anticipate some of its later cash needs by adding about $3--$4 billion to the bill supply in October. On the other hand some partly offsetting downward pressure on bill rates might be generated if the Treasury were to contemplate, as an alternative or a supplement, a financing strategy which involved considerable debt lengthening. Long-term interest rates are likely to be very sensitive to the trend of market expectations as to the effectiveness of phase II policies. Over the near-term, the heavy volume of new corporate issues, particularly if accompanied by sizable Treasury debt lengthening operations, could exert some upward rate pressures. (11) An appreciable decline in the Federal funds rates--for example, consistently into a 5--5-1/4 per cent range or lower--would confirm market hopes that the recent weakness in money supply will be followed by an easing in money market conditions. Both long- and short-term rates would be expected to decline under those circumstances, with declines quite marked if and as the Federal funds rate moves down to trade consistently below 5 per cent. (12) Growth in time and savings deposits other than large CD's is expected to accelerate from recent low rates to about a 9-1/2 per cent annual rate in September, given experience in the first two weeks of the month, but, under alternative A, to drop back to a 7-1/2 per cent rate in the fourth quarter. The lower growth rate is anticipated in view of strengthened consumer spending and the liklihood that market interest - 11- rates will not drop enough to provide much in the way of incentive for savers to add sharply to time deposit funds. A somewhat more rapid growth in such deposits would be anticipated under alternative C, given the marked decline in market interest rates that would be expected. (13) Under any of the alternatives presented, funds available to banks from U.S. Government deposits, private demand deposits, and time deposits other than large CD's taken together are likely to grow much less rapidly on balance in September and the fourth quarter than they had in the spring and summer. As a result, banks may be led to bid actively for large CD's should business and other loan demands be strong, as would be expected if economic recovery proceeds at the accelerated rate indicated in the staff GNP projection. Under alternative A, the adjusted bank credit proxy is expected to grow at an 8 per cent annual rate in September and 4-1/2 per cent in the fourth quarter. Under alternative C, the growth rate in the bank credit proxy in the fourth quarter is expected to be around 6-1/2 per cent, as banks in a period of declining interest rates add to investments for purposes of obtaining high yields or capital gains. -12- Possible directive language (14) Alternative A. This language is proposed for possible use if the Committee decides to seek, or permit, the growth rates for the aggregates over the months ahead discussed earlier in connection with alternative A, including rates for M 1 of 1-1/2 and 3-1/2 per cent in September and the fourth quarter, respectively. The money market and reserve conditions believed likely to be consistent with such growth rates are noted in paragraph (8). "To implement this policy, the Committee seeks to achieve [DEL: more] moderate growth in monetary and credit aggregates over the months ahead. System open market operations until the next meeting of the Committee shall be conducted with a view to achieving bank reserve and money market conditions consistent with that objective." This language differs from that of the directive adopted at the August 24 meeting only in the deletion of the word "more" from the phrase "to It is assumed that the Committee would achieve more moderate growth . . ." not want to continue to call for 'more moderate growth" in light of the August experience, when M 1 and M 2 grew at rates of about 3 and 5 per cent, respectively. (15) in two respects. Alternative B. The language of B differs from that of A First, the words "over the months ahead" are omitted following the reference to growth in the aggregates. This modification -13is proposed for consideration if the Committee does not wish to accept as aggregate targets the comparatively low growth rates of alternative A for a period longer than the weeks immediately ahead. Secondly, a clause reading "taking account of developments in capital markets" is added at the end of the first sentence. This change is suggested for consideration if the Committee decides to instruct the Manager to give considerable weight to the objective of avoiding excessive pressures in capital markets, recognizing that this might require some adaptation in reserve supplying operations. Either of these modifications might, of course, be made without the other. "To implement this policy, the Committee seeks to achieve [DEL: more] moderate growth in monetary and credit ahead], months the over aggregates [DEL: TAKING ACCOUNT OF DEVELOPMENTS IN CAPITAL MARKETS. System open market operations until the next meeting of the Committee shall be conducted with a view to achieving bank reserve and money market conditions consistent with that objective." (16) Alternative C. This language is proposed for possible use if the Committee decides to seek somewhat more rapid growth rates in the aggregates than called for under alternative A. The money market and reserve conditions believed likely to prove consistent with those growth rates are noted in paragraph (8). "To implement this policy, the Committee seeks to growth in monetary and credit more] PROMOTE [DEL: achieve moderate -14- aggregates over the months ahead. System open market opera- tions until the next meeting of the Committee shall be conducted with a view to achieving bank reserve and money market conditions consistent with that objective." This directive does not include the phrase "taking account of developments in capital markets" since the prompt and substantial easing of the money market contemplated is likely to minimize the risk of adverse capital market developments, particularly in a period when the monetary aggregates are weak. -15- Alternative Weekly Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) M1 Alt. A(B) M2 Alt. C Alt. A(B) Alt. C September 229.0 230.6 229.0 230.6 458.7 460.9 458.7 460.9 October 229.2 228.8 229.4 229.2 228.9 229.6 459.8 459.7 460.8 459.8 459.8 461.0 Credit Proxy Alt. A(B) Alt. Total Reserves C Alt. A(B) Alt. September 22 29 353.1 353.1 353.1 353.1 31.8 32.1 31.8 32.1 October 354.4 353.6 356.0 354.5 32.0 32.1 32.1 32.1 32.2 32.1 6 13 20 353.9 356.4 C -16- Total and Nonborrowed Reserve Paths (Daily averages in millions of dollars, seasonally adjusted) Total Reserves September October November December Nonborrowed Reserves Alt. A(B) Alt. C Alt. A(B) Alt. C 32,116 32,089 32,259 32,191 32,123 32,151 32,383 32,382 31,474 31,545 31,686 31,642 31,537 31,857 32,059 32,083 Per Cent Annual Rates of Growth 17.5 September October November December - 17.5 1.0 8.5 1.0 6.5 - 2.5 3rd Q. 1971 4th Q. 1971 11.0 1.0 11.0 3.0 23.0 - 2.5 5.5 - 1.5 25.5 12.0 7.5 1.0 8.5 2.0 Weekly Paths--Seasonally Adjusted Total Reserves September October 6 13 20 Nonborrowed Reserves Alt. A(B) Alt. C Alt. A(B) Alt. C 31,831 32,087 31,831 32,112 31,156 31,282 31,156 31,532 32,041 32,124 32,060 32,091 31,551 32,174 32,120 31,613 31,576 31,851 31,913 31,886 Weekly Paths--Not Seasonally Adjusted Total Reserves September October 6 13 20 Nonborrowed Reserves Alt. A(B) Alt. C Alt. A(B) Alt. C. 30,634 30,924 30,634 30,974 29,834 3u,124 29,834 30,374 31,249 31,188 31,485 31,299 31,238 31,535 30,699 30,638 30,935 30,999 30,938 31,235 CHART 1 STRICTLY CONFIDENTIAL (FR) 9/17/71 MONETARY AGGREGATES NARROW MONEY SUPPLY M 1 BILLIONS OF DOLLARS 230 -220 -1210 I I I I I1 I I I II I I II I I BROADER MONEY SUPPLY -J460 S440 -410 1970 1971 A M J J A '71 - Actual Currently Projected --- Wkly. Path, Indicated at FOMC Meetmg (8E24j71) _Z Longer Run Path STRICTLY CONFIDENTIAL (FR) CHART 1A 9/17/71 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS r 360 -355 356 352 8.0% PATH -348 -315 344 305 -340 1 SI I I TOTAL RESERVES 115% PATH 1971 1970 - Actua -- Currently Projected --- Wkly. Path, Indicated at FOMC Meeting (~/24/71) JA A M J J I i J A I A 'Longer S S Run Path CHART 2 9/17/71 INTEREST BEARING SOURCES OF BANK FUNDS BILLIONS OF DOLLARS -20 -4260 TOTAL TIME AND SAVINGS DEPOSITS -i200 TIME AND SAVINGS DEPOSITS OTHER THAN CD'S CD'S 1970 1971 CHART 3 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS INTEREST RATE Short-term INTEREST RATES Long-term PER CENT WEEKLY NEW CORPORATE Aaa WEDNESDAY FHA MORTGAGES FNMA MONDAY AUCTION ,f AA I WEDNESDAY GOVERNMENT BO 26-YEAR AVERAGES L I 1970 1971 1970I 1970 I I 197 1 1971 STRICTLY CONFIDENTIAL (FR) Table 1 PATHS OF KEY MONETARY AGGREGATES Narrow Money Supply (M1 ) 1/ Perod 1 Path as of Aug. 24 2 Broad Money Supply (M 2 ) 2/ Actuals & Path as of 3 Current Prol. 4 Actuals & Adjusted Credit Proxy 5 Current Prol Aug. 24 September 17, 1971 Path as of Aug. 24 6 Actuals & Current Proj Total Reserves 7 Path as of Aug. 24 8 Actuals & Current Prol. Monthly Pattern in Billions of Dollars 1971: Apr. May 2442.0 447.3 451.4 221.1 223.9 225.6 June July Aug. Sept. 229.0 230.0 227.5 228.1 (228.4) 341.7 343.8 345.7 1454.1 455.9 458.0) 456.9 459.3 351.3 352.4 348.0 351.1 (353.4) 30.8 31.3 31.3 31.7 32.2 31.3 31.7 (32.1) Annual Percentage Rates of Change-Quarterly and Monthly 1971: 1971: Ist Qtr. 2nd Qtr. 3rd Qtr. 8.9 11.3 8.0 Apr. May June 17.8 12.6 ( 5.0) 7.0 9.3 15.2 12.1 14.4 11.0 9.1 10.1 July Aug. Sept. 7.5 5.0 8.0 (6.0) 3.2 ( 1.5) 11.0 6.6 11.5 12.0 4.0 8.0 10.7 ( 8.0) (11.0) 2.7 5.3 7.4 6.6 7.2 4.8 S5.5) 7.0 6.5 10.9 6.5 (9.0) 17.0 0.2 0.3 17.6 17.0 t4.9 (17.0) Weekly Pattern in Billions of Dollars 1971: July 28 226.9 4 53.9 348.7 31.4 Aug. 4 11 18 25 226.7 228.6 228.7 228.1 454.1 348.1 4i56.3 4i56.3 4i56.3 348.7 31.6 31 .8 31.5 31.8 31.4 31.9 32.5 32.2 31.9 31.9 32.3 32.2 (31.8) 230.2 459.0 354.5 350.5 353.8 ii Sept. 1 8 15 pe 22 229.3 229.0 228.8 231.4 U NOTES: 227.4 227.1 226.6 (229.0) 458.1 458.0 458.0 460.8 - -- 353.4 353.3 352.6 352.7 4i55.8 4i56.1 456.0 (1458.7) - 353.9 353.7 353.4 (353.1) aaII Annual rates of change other than those for the past are rounded to the nearest half per cent. Data shown in parenthesis are current projections. 1/ Currently plus private demand deposits. 2/ M, plus time deposits other than large CD's. ______________ pe - Partially estimated. FR712-D Rev 2/16/71 STRICTLY CONFIDENTIAL (FR) Table 1-A September 17, 1971 PATHS OF KEY MONETARY AGGREGATES Monthly Pattern in Billions of Dollars 1971: Apr. May June 5.4 4.2 3.9 July Aug. 3.7 6.1 ( 6.2) Sept. 248.3 251.4 254.4 256.8 258. 2 (261.2) 258.2 259.8 227.9 229.3 221.0 223.4 225.8 27.3 27.9 28.6 5.1 4.1 4.5 226.6 227.8 (229.6) 30.1 30.3 (31.6) 4.3 3.9 (3.7) Annual Percentage Rates of Change--Quarterly and Monthly 1971: 1971: 1st Qtr. 2nd Qtr. 3rd Qtr. 27.3 13.5 (10.5) 8.5 Apr. May 10.7 June 1A.3 6.0 14.8 13.0 12.9 15.0 4.3 11.3 July 6.5 7.5 Aug. Sept. 6.5 (14.0) 27.2 13.7 (6.5) 7.0 7.5 6.4 ( 9.5) Weekly Pattern in Billions of Dollars 1971: July 28 4.1 257.5 227.0 30.5 4.3 Aug. 4 11 4.3 4.3 5.9 8.2 257.5 257.4 257.9 258.7 30.1 29.7 3.9 30.3 3.7 228.8 227.4 227 7 227.6 228.2 30.5 3.7 228.8 229.0 229.2 229.4 228.4 229.0 229.3 (229.7) 30.8 31.6 4.0 3.8 3.7 (31.8) (3.7) 18 25 Sept. 8.8 1 8.0 8 7.5 8.1 (5.7) 15 pe 22 25i 8.9 259.0 259.3 259.6 259.9 .1 NOTES: pe - Parially estimated. Annual rates of change other thah those for the past Data shown in parenthesis are current projections. 259.1 260.3 260.9 (261.5) 31.3 4.2 . are rounded to the nearest half per cent. FR 712-K Rev2/16/71 CONFIDENTIAL (FR) Table 2 AGGREGATE RESERVES AND MONETARY VARIABLES RETROSPECTIVE CHANGES, SEASONALLY ADJUSTED rates in percent) - Monetary Variables Total 4 Money Supply _(Annual Reserve Aggregates 1 2 1 Period Nonborrowed Reserves Total Reserves Annually 1968 1969 1970 3 Member Bank Deposits + 7.8 - 1.6 + 6.4 + 6.0 + 9.5 +11.8 0.2 - 3.0 + 9.0 - 4.0 Adlusted 5 Credit Proxy n.a. n.a. + 8.3 7 6 Total 8 Currency + 7.8 - 3.1 + 5.4 + Private Demand Deposits September 17, 1971 Addenda 10 9 Dests Adjusted T tt. Deposits CNonbeal Paper +11.1 - 5.0 +18.4 + 6.3 + 3.4 n.a. + 6.3 + 7.9 + 2.4 + 5.1 + 7.8 + 7.3 - 7.4 6.0 n.a. Semi-anniallv Ist Half 1970 2nd Half 1970 + 1.9 +17.1 +20.0 + 3.5 +12.9 + +13.0 + 4.8 + 7.8 4 4.6 + 5.3 + 4.7 + 7.8 +27.9 + 4.7 +10.6 +12.8 - 1.7 1it Half 1971 + 8.9 +82 +13.5 + 8.8 +10.3 + 9.4 +10.5 +20.8 +20. 8 -18.2 - + + + + + + + + + 1.4 +14.1 +32.2 + 21.8 + 2.5 + 7.0 + 9.3 +11.6 +17.8 + 7.5 -16.2 +20.4 -24 Qurterly Ist Qtr. 1 2nd Qtr. 1 3rd Qtr. 1 4th Qtr. I - + 0.6 + 6.0 +24.1 +15.1 4 0.5 + 6.5 +17.2 + 8.3 + + + + +11.0 + 6.6 +11.0 + 5.3 117.0 + 9.6 +10.9 + 6.5 + 8.9 +11. 9 Apr. May June +21.3 -13.9 + 0,5 +25.4 -19.0 + 6.2 +16.8 +13.7 - + 5.8 - 1.2 + 7.0 + 5.2 + 2.3 Julv Aug. + 6.0 +23.3 +27.5 -16.1 +48.8 +40.1 +22.7 +29.2 +19.0 +18.1 +23.2 + 9.7 4.4 +10.1 +11.1 +21.4 +16.1 +19.3 +14.9 - Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Jullv Aug. p, 2.9 0.4 1.9 + 3.6 + +18.4 +22.8 +12.2 +11.4 + 8.8 + 9.2 + 8.8 + 9.7 +12.4 + +15,1 2.7 +17.0 + 0.2 - +0.3 +14.9 -13.1 +16.2 _______ NOTE: 5.9 + 4.1 +24.4 + 9.4 Sept. 1971: - 3.3 + 2.6 +19.1 + 6.6 1st Qtr. 1 ?nd Qtr. 1 1970. - I 6.2 ________ 4.5 -112.2 411.1 4 '.3 - 8.8 +17.2 .I...I____________ 5.9 5.8 6.1 3.4 6.1 9.4 3.3 5.8 5.3 5.3 6.7 2.7 + 9.0 + 9.6 4 8.9 +11.8 +27.3 +13.5 +23.3 +17.3 +10.3 +15.3 +10.5 + 2.5 + 2.2 +19.7 +10.9 +11.4 + 8.1 + 5.3 + 7.3 4 5.7 + 6.8 + 5.7 + 7.5 + 4.4 + + 8.9 + 6,6 +35.6 +28.8 +29.8 +11.9 + 5.9 +10.0 4 1.1 + 7.0 +16.5 + 1.1 + 2.8 + 6.2 + 7.5 + 4.9 + 4.9 - 0.7 + 2.2 + 6.6 +20.3 +15.1 +28.8 +10.6 + 9.4 +10.5 +12.9 + 8.9 + 5.3 + 7.4 + 6.6 + 1.1 +14.0 + 7.4 + 9.8 +L1.6 + 9.7 - 1.4 +16.0 +12.2 .4 9.3 +12.0 + 9.5 + 7.8 +25.1 +18.5 +24.9 +21.8 +17.6 +25.5 +28.6 +25.9 +10.7 +15.0 + 7.1 +11.7 + 2.3 + 9.7 + 9.6 + 3.4 +14.3 +11.3 +6.5 +15.1 +15.8 + 8.0 +10.7 +15.2 + 9.1 +10.1 + 3.2 _________ I 2.5 ________ + 3.0 +14.5 +14. 8.4 7 -12.5 1-34.4 +18.9 -30.0 -87.5 7.2 - +49.6 +32.4 -28.7 +58.1 - 9.0 -10.9 -55.2 +4.4 -15.8 -26.3 -32.1 n.a. I.________-_______ FR 712 - E Agregate 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, n.a.-Not Available 1970. CONFIDENTIAL (FR) Table 3 AGGREGATE RESERVES AND MONETARY VARIABLES September 17, 1971 SEASONALLY ADJUSTED _ __I___ ___ __~ __ ---" ,Commercial _ Aggregate Reserves T o ta l - -3 Period Total loney Supply .- . Currency r Demanos Total C Bank L Time Deposits 11 10 9 a 7 Non red borrowed Required - Other CD's L-1i 12 Adjusted redit Proxy Deposits (In millions of dollars) 1970: 1971: (In billions of dollars) Jan. Feb. Mar. 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 46.7 159.0 158.1 159.8 193.3 193.5 195.3 10.6 10.6 11.5 182.7 182.9 183.8 304.8 303.4 306.1 29.4 30.0 30.4 Apr. May June 28,236 27,890 27,902 27,350 26,916 27,056 28,646 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 12.9 13.2 13.2 185.6 187.1 189.0 309.6 309.3 311.1 31.2 31.7 30.9 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 48.2 162.5 163.7 164.6 208.2 213.2 218.5 16.9 19.0 21.7 191.3 184.2 196.8 315.8 321.9 324.5 28.7 28.5 29.7 Oct. Nov. Dec. 29,385 29,474 29,925 28,928 29,033 29,584 28,134 29,233 29,703 310.6 314.0 319.6 213.0 213.5 214.6 48.5 48.7 48.9 164.5 164.8 165.7 222.2 225.0 230.4 23.2 23.9 26.0 199.1 201.1 204.4 324.8 326.7 331.2 30.5 29.7 31.2 Jan. Feb. Mar. 10,229 30,515 10,748 29,801 30,176 30,398 30,029 30,255 30,534 323.9 329.1 333.2 214.8 217.3 219.4 49.2 49.6 50.0 165.5 167.7 169.4 235.3 240.9 246.1 27.1 27.4 27.8 208.2 213.5 218.3 334.1 337.7 340.2 31.0 30.7 29.3 Apr. May tune 30,816 31,253 31,257 30,644 30,961 30,801 30,611 30,998 31,046 336.6 339.7 341.2 221.1 223.9 225.6 50.5 50.9 51.2 170.5 173.0 174.4 248.3 251.4 254.4 27.3 27.9 28.6 221.0 223.4 225.8 341.7 343.8 345.7 29.4 29.0 28.3 July Aug. p 31,266 31,654 30,465 30,876 31,094 31,473 343.7 347.2 227.5 228.1 51.7 51.8 175.8 176,3 256.8 258.2 30.1 30.3 226.6 227.8 348.0 351.1 27.6 n.a. 7 14 21 28 31,032 30.831 31,552 31,414 30,462 29,950 30,346 30,849 30,769 31,026 31,135 31,332 343.2 343.4 343.3 344.4 228.7 227.4 227.7 226.9 51.8 51.7 51.8 51.7 176.9 175.7 175.9 175.2 256.0 256.6 256.9 257.5 29.6 30.1 30.1 30.5 226.5 226.5 226.8 227.0 347.5 347.7 347.8 348.7 28.2 28.4 28.3 28.J 4 11 18 25 31,776 31,473 31,761 31,415 31,022 30,980 36,572 30,679 31,357 31,490 31,507 31,349 344.2 344.4 346.8 350.1 226.7 228.6 228.7 228.1 51.8 51.9 51.9 51.7 174.9 176.7 176.7 176.5 257.5 257.4 257.9 258.7 30.1 29.7 30.3 30.5 227.4 227.7 227.6 228.2 348.1 348.7 350.5 353.8 27.9 27.8 27.9 28.4 31,938 32.337 31,243 31,651 31,633 32,108 349.9 349.9. 227.4 227.1 51.8 51.7 175.6 175.5 259.1 260.3 30.8 31,3 228.4 229.0 353.9 353.7 28.2 28.3 Week enditg: 1971: July Aug. Sept. NOTES. 13 ddendum' Nonbank Comm Paper I p 8 0 Aggregate reserve series have been adjusted to eliminate changes in percentage reserve requirements against deposits, Buro-dollax borrowings are incllded beginning October 16, 1969, and requireefnts on bank-related coamercial paper are 1970. Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements, bank-related dollar borrowings of U.S. banks. Weekly data are daily averages for statement weeks. Monthly data are daily average paper figures which are for last day of month. p - Preliminary. n.a. - Not Available. but reserve requirements on included beginning October 1, commercial paper, and Euroexcept for nonbank coirmercial FR 712 -F Table 4 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) SMember Free reserves Period i Excess reserves Total I Borrowings Banks R s e rve C i t Major banks Outside N.Y. 8 N.Y. ther Country Monthly (reserves weeks ending in): 1970--January February March - 759 916 751 169 210 129 928 1,126 880 148 106 90 287 317 225 232 289 287 261 414 278 April - 687 178 - 865 227 331 119 188 May - 765 159 924 165 241 228 290 June - 736 171 907 140 289 217 241 July August September October -1,134 - 706 - 374 - 274 183 175 235 193 1,317 881 609 467 218 143 101 12 460 278 115 40 348 273 274 313 2@1 187 119 102 November - 199 210 409 42 17 294 57 December - 84 264 348 36 16 265 30 1971--January February March June July Aug. p 1971--Apr. May June July Aug. Sept. - - 140 238 378 - 45 36 262 71 120 264 192 35 335 312 29 41 30 17 248 238 29 16 - 2 6 303 672 633 154 218 211 158 194 152 212 514 830 827 15 78 103 77 153 9 36 5 223 130 119 60 159 270 318 '9 38 167 260 226 1 1 7 80 277 19L. 14 21 28 -- 58 3 -128 -- 184 208 81 48 150 84 176 17 -42 -i 34 127 79 86 6 4 14 5 12 19 26 - 191 131 204 93 365 230 102 174 174 99 306 267 46 39 134 91 40 20 47 36 61 22 74 84 27 18 51 56 2 9 16 23 - 361 80 149 409 285 73 254 210 646 153 403 619 171 46 86 103 100 27 161 217 25 152. 202 30 516 232 750 107 192 201 308 7 14 -384 86 277 5 -252 19 21 661 991 - 4 1,121 78 47 67 344 255 241 28 282 309 -89 257 189 545 397 333 9 88 236 212 - - 3 58 55 161 153 4 - 330 434 764 11 43 122 - 307 292 566 27 593 18 25 - -955 680 47 328 224 91 218 1,1"9 771 338 229 254 97 326 313 261 132 1 p Sp 15 P -36 - 541 - 191 345 224 266 708 765 457 52 286 370 306 231 187 173 129 99 -97 Preljminar V - Prelirinar". i Table 5 SOURCE OF FEDERAL RESERVE CREDIT Retrospective Changes (Dollar amounts in million of dollars, based on weekly averages of daily figures) Total Federal Reserve credit float) (Exc Period May June July Aug. Sept. ( -- 707 + 206 +3,220 (- 143) +1,180 - 124 (- 82) + 124 12) 70) + 84 + 113 + - 7 14 21 28 + 155 - 255 4+ 149 + 54 + 145 F + 86 423 - 43 + + 5 12 19 26 4 + + + + + 712 272 + 1 + 304 + + 12/30/70) 2 9 16 23 30 771 201 503 115 144 - + 305 + 974 202 - 57 418 2/ 4 160 +1,156 - 106 2/ 7 14 21 28 + + 362 364 + - 743 957 4 11 J8 25 + I p 8p 15 p + 47 2/ 4 128 (+ 360 (+ + 30 + 11 439 463 - - 2/ (-- ) ) ) ) + 141 + + 1 73 4 - - 116 + 296 + > 383 + 399 + + - 468 387 + 309 - 54 50 25 71 56 328 99 167 + - 168 - 70 - 23 9 + + 207 134 537 + - 47 20 + 47 ) - 586 - 21 ) ) -70 ) + - 40 49 157 101 - 14 25 18 10 + 117 + 27 + + 218 76 + - 68 20 + 35 -70 -- + 109 ) 282 ( -) ( -) -145 (- 145) + + -4 - 91 15 -- - I. + 35 28 Member banks borrowing + 243 - 884 6 4 6 - 57) 87) Bankers' acceptances, 50 - + 27 f'iures it paretthesis reflect reserve effect of match sale-purchase agreement. Includes effect of changes in special certificates 6f $ +94 tillion of the week of June 9, and $ -510 rtillio of the week of June 23. p - Preliminary + + - 162 119 ( -- ( 397 ( 47 68 11 - 7 + - + (+ 144) ( + - 8 27 ((- 101 (-S 17 298 50 S 73 - + + + 335 - 204 + 483 67 63 S 73 + + + -359 + + ( -) (-) (- 39) + 348 (+ 39) 41,151 ( -) 131 208 25 27 + - ) +1,059 373 74 562 + ) 384 ( -173 (-400 (-256 ( -- .------- 1/ Other Repurchase . agreements +4,279 45,192 +4,276 1970 (12/11/69 - 1971--Apr. Bills 1 _ +5,539 +3,351 1969 (12/25/68 - 12/31/69) Federal Agency Securities U.S. Government securities__ Total holdings -- _____________-~_ _ $ +416 million of the week of June 16, ____________ Table 6 MAJOR SOURCES AND USES OF RESERVES Retrospective and Prospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) ,L----of r p serve . 1 v su o tect r a Sac t Federal Reserve Foreign I Other nonmember Gold Currency Treasury credit (excl. deposits deposits and ousdeat stock floart 1/ and Bold loans F.R. accounts I/ Sl floatl i nd i c a t (Si g effect on r e s e r ves) -------------------- --Period 1969 (12/25/68 - 12/31/69 1970 (12/31/69 - 12/30/7( 1971--Api May June July Aug. Sept. 1/ 7 14 21 28 I +5,539 +3,351 + 279 - 275 + + 348 5 12 19 26 + + + 4- 771 201 503 115 2 9 16 23 30 + 305 - 974 7 14 21 28 + + 362 364 + - 743 957 4 11 18 25 + 335 - 204 + 483 - 116 + + - 383 1 8 15 Y +1, 154 - 813 + 773 -2,676 -3,122 - 243 - 131 -384 54 + 307 - 248 - 229 + 83 + 218 + 169 + 522 + 202 + 160 +1,156 4 - - 86 - 114 468 387 F6r retrospective details, see Table 5. 2 Includes $400 million in special drawing account. p - Prelirifnary. + - 379 181 192 --~-------- - ------ 398 648 776 + 241 + 667 + + 54 1 + 235 + 241 4 301 - 10 + + + 14 14 21 1 + - 497 211 421 177 - 14 - 13 + - 5 25 - 327 + 291 - 122 + 291 + 36 - II - - 11 334 - 54 - 244 + 176 + 376 ;- 217 + 11 + 8 + 204 - + 4 29 - 266 17 + 125 - 113 - - 45 76 36 453 153 65 - 178 + 16 - - 4 - 898 -1,655 = i'- Change ---- SBank use Of reserves in total reserves Required reserves Excess reserves +1,448 +1,163 +1,340 +1,257 + 108 / - 171 -- 99 69 - 173 - + 21z + 24 4 - 187 23 + + 440 252 - + 72 99 + 306 + 317 - 561 - + - 406 188 - 128 + 72 - 81 + 111 - 178 - 212 + 146 + 181 - 250 4 351 + 24 213 + 45 - 272 401 + 277 94 - 215 179 74 + 450 490 + 78 + 197 -45 - 315 + + - -33 28 228 33 28 + 43 82 + 110 + + - - 127 33 135 44 22 - 27 -37 5 - 7 8 - - - 89 29 1 332 - 361 - 31 57 + + 166 459 + 254 - 121 + 255 - 10 + 155 4 29 - + 344 + 26 + 256 - - 30 + 133 42 Table 7 Reconciliation--Money supply and Credit Proxy Adjusted (Billions of dollars, not seasonally adjusted) Levels, Item March 1. Money supply--M 2. Plus: Time deposits other than large CD's 3. Equals: 1 Money supply--MN 1971 Dollar Change 2nd Qtr., June Aug.7 217.4 223.6 224.7 6.2 227.8 7.2 218.9 226.1 436.3 449.6 452.5 1971 June to Aug., 1.1 13.3 Plus: 4. U.S. Gov't. deposits at member banks 5. Net domestic commercial bank deposits at member banks 4.5 4.4 5.7 -0.1 4.3 4.0 4.2 -0.3 28.0 31. 2 0.4 2.8 4.5 3.9 -2.5 -0.6 1.9 1.9 1.9 2.7 217 2.6 Demand deposits at nonmember banks 38.3 39.9 40.3 0.4 Time deposits at nonmember banks 56.5 58.8 60.2 1.4 Currency component of the money supply 49.5 51.1 51.9 Deposits at Edge Act Corps., agencies and foreign branches 0.8 0.7 0.7 Foreign deposits at F.R. 0.4 0.4 0.4 6. Large CD's 7. Nondeposit funds 1/ 7.0 8. Time deposit of U.S. Gov't. and commercial banks F.R. Float 9. 0.2 28.4 -0.1 Less: 10. 11. 12. 13. 14. -0.1 Equals: 15. credit Proxy Adjusted 339.2 344.7 348.6 3.9 p - Preliminary. Includes bborrowings from banks own foreign branches,commercial paper and other minor item. NOTE: Sums of levels and changes may not add because of rounding. 1/ 1971 Table 7A Reconciliation--Money Supply and Credit Proxy Adjusted (Billions of dollars, seasonally adjusted) Levels Item 1. Money supply--M 1 2. Plus: Time deposits other than large CD's 3. Equals: March 1 971 June IJune to Aug., 1971 Percentage Dollar Percentage Change Jhange Change I 2nd Otr. 1971 Dollar Aug. p. hChange 219.4 225,6 228.1 6.2 11.3 2.5 6.6 218.3 225.8 227.8 7.5 13.7 2.0 5.3 437.6 451.4 455.9 12.6 4.5 6.0 Money supply-- M2 13.8 Plus: 4. 5. U.S. Gov't. deposits at member banks 4.8 3.9 6.1 -0.9 Net domestic commercial bank deposits at member banks 4.7 4.3 4.7 -0.4 27.8 28,6 30.3 0.8 7.0 4.5 3.9 50.0 51.2 51.8 1.2 91.8 95.7 98.0 3.9 6. Large CD's 7. Nondeposit funds 1/ -2.5 Less: 8. 9. Currency component of the money supply Deposits at nonmember banks, and other items 2/ 2.3 Equals: 10. Adjusted Credit Proxy 340.2 345.7 351.1 6.5 Includes borrowings from banks own foreign branches, commercial paper and other minor items. 2/ Other items include money supply type deposits at Edge Act corporations and domestic branches of foreign banks. NOTE: Sums of levels and changes may not add because of rounding. p - Preliminary. 1/ 

Federal Reserve (1971, September 20). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19710921

@misc{wtfs_bluebook_19710921,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1971},
  month = {Sep},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19710921},
  note = {Retrieved via When the Fed Speaks corpus}
}