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) October 14, 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 October 14, CONFIDENTIAL (FR) 1971. MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) In September and early October both the narrowly and broadly defined money supply aggregates fell considerably short of the paths projected in the last blue book, as shown in the table on page 2. The outstanding level of M1, instead of rising from the reduced levels of early September as expected, dropped further as the month progressed, and for the month as a whole, declined at a 3.7 per cent annual rate. As a result, M 1 growth over the third quarter was reduced to 3.0 per cent and for the second and third quarters combined to about 7.0 per cent. With private demand deposits turning down and time deposits other than CD's growing less than anticipated, the expansion of M2 was virtually halted in September and was reduced to a 4.5 per cent annual rate in the third quarter. Growth of the adjusted credit proxy, on the other hand, remained about on target for both September and the third quarter, as greater than expected strength in large CD's and nondeposit sources of funds approximately offset the shortfalls in other deposits. (2) As incoming data on the money supply aggregates continued to fall short of path levels, the Desk sought to provide enough reserves to promote somewhat easier money market conditions, aiming at gradually reducing the Federal funds rate to around 5-1/4 per cent or a little below. In the two weeks ending October 6, required reserves were below path, on balance, as indicated in the table on page 3. At the same time nonborrowed reserves were Recent Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) M 1 M2 Sept. 21 Path Adjusted Proxy Sept. 21 Actual Path Sept. 21 Path Actual 1.5 5.0 2.6 -3.7 3.0 5.5 6.0 4.8 1.6 4.5 8.0 9.0 1.0.3 8.5 9.0 228.4 228.0 227.3 458.0 455.9 456.5 353.4 351.0 353.5 15 22 29 229.0 230.6 227.1 226.8 226.7 458.7 460.9 455.8 456.1 456.4 353.1 353.1 353.9 352.9 353.0 6 13p 229.2 228.8 226.9 226.7 459.8 459.7 457.4 457.6 354.4 353.6 353.2 353.8 Actual Annual Rates of Growth, per cent August September 3rd Quarter Levels, billions of $ August September Week ending Sept. Oct. p - Partly projected. Reserve Aggregates: September 21 Paths vs. Actual (Seasonally unadjusted, in millions of dollars) Statement Week Ending Actual Minus September 21 Path Actual September 21 Path 31,082 30,656 30,729 353 426 30,924 (30,910) 30,374 (30,360) 30,699 (30,680) 225 550 158 (172) 282 (296) 30 ( 49) 128 -124 31,092 30,782 30,795 297 31,249 (31,146) 30,699 (30,596) 31,024 (30,921) 225 -157 (-54) 83 (186) -229 (-126) 72 September 29 Total reserves Nonborrowed reserves Required reserves Excess Borrowings October 6 Total reserves Nonborrowed reserves Required reserves Excess Borrowings 310 550 -240 October 13 Total reserves Nonborrowed reserves Required reserves Excess Borrowings NOTE: 30,766 30,316 30,665 101 450 31,188 (31,338) 30,638 (30,788) 30,963 (31,137) 225 550 -422 (-272) -322 (-172) -298 (-148) -124 -100 Figures in parentheses reflect adjustment of the path for unanticipated changes in U.S. Government deposits. -4above target path, and as a result net borrowed reserves were much reduced, with banks electing both to hold more excess reserves and to reduce their borrowings from the Federal Reserve. The funds rate initially dropped less than might have been expected under these conditions--averaging, for example, 5.43 per cent in the week ending September 29. But by the week ending October 13 the Federal funds rate had softened to about the 5-1/4 per cent target. In that week, nonborrowed reserves dropped off sharply relative to target, but the demand for reserves, as indicated by the shortfall in required reserves relative to target, was also lower than earlier anticipated. (3) Since the last meeting of the Committee, market interest rates have experienced significant across-the-board declines as shown in the table below. In fact, for most series, recently prevailing rate levels Recent Interest Rates On Market Securities August Series Rate Levels (Per cent per annum) Prevailing at Most recent Last Meeting (10/14) 13 (9/20) 5.15 5.50 5.63 4.72 5.38 5.50 4.44 5.13 5.11 10-yr. U.S. Treas. New Issue Corps. 6.68 6.15 5.87 (Aaa basis) Municipals (Bond 7.97 7.56 7.22 6.03 5.38 4.99 Series Short-term 3-mo. Treas. bill 30-89 day Fin. Paper 60-90 day CD's Long-term Buyer) -5are close to or below the earlier lows reached in the immediate aftermath of the President's mid-August speech. While there is still uncertainty surrounding the wage-price control program, the plans recently announced have so far contributed to strengthening of bond markets. But in addition bond prices have risen in response to the recent moderate easing of money market conditions and to the prospects for further easing of money market conditions inferred from the recent slow growth of the monetary aggregates. (4) The following table provides a somewhat broader and longer- range perspective on developments in major financial aggregates for selected recent periods. Fourth and First Qtrs. combined (March over Sept.) Total Reserves Second Quarter (June over March) Third Quarter (Sept. over June) Second and Third Qtrs. combined (Sept. over March) 8.9 6.6 10.4 8.6 10.3 5.3 10.9 8.2 6.2 11.3 3.0 7.2 M 2 (M1 plus time deposits at commercial banks other than large CD's) 13.7 12.6 4.5 8.6 M3 (M2 plus deposits at thrift institutions) 14.6 14.8 7.4 11.2 9.7 6.5 9.0 7.8 10.5 9.1 9.8 9.6 Large CD's $ 6.1 $ 0.7 $ 3.8 $ 4.6 Bank-related commercial paper N.S.A. - 2.9 0.0 - 0.1 - 1.0 Nonbank commercial paper - 0.4 - 0.9 Nonvorrowed Reserves 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/ Short-term market paper (Actual $ change in billions) 0.13/ 0.1 4/ Other than interbank and U.S. Government. Based on month-end figures. Includes loans sold to affiliates and branches. August over June. 4/ August over March. 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. 1/ 2/ 3/ Prospective developments (5) Three alternatives for Committee consideration are summarized in the text table below, with the monetary aggregate paths laid out in more detail in the table on the next page. (Two tables at the end of text show weekly paths for the monetary aggregates and more detail on aggregate reserves). Alternative A Alternative B Alternative C Federal funds rate 5--5-3/8 4-1/2--5 3-3/4--4-1/2 Member bank borrowings 300--450 150--300 50--150 October November December 3% 1 3-1/2 3% 2 4 3% 3 5-1/2 4th Q. 1971 1st Q. 1972 2-1/2 4-1/2 3 6 4 7-1/2 Growth in M1 (SAAR) (6) The money market conditions shown for the three paths vary from a range around those recently prevailing (Alt. A) to considerably easier specifications. Overall credit conditions--as typified by behavior of short- and long-term interest rates--might well ease somewhat between now and the next Committee meeting even under Alternative A. Credit demands from businesses and State and local governments in long-term markets appear to be tapering off, and investors have shown a greater willingness to purchase longer-term securities. Investors' demands will be influenced, however, by their evaluation, as the details of Phase II become known, of the extent to which it seems to promise significant restraint on wage and price pressures. -8- Alternative Monthly and Quarterly Paths of Key Monetary Aggregates M Alt. A 1 Alt. B Alt. C Alt. A 227.9 228.1 228.8 227.9 228.3 229.1 227.9 228.5 229.5 459.0 460.3 462.2 459.0 460.6 463.0 459.0 231.4 232.4 233.9 468.4 470.3 471.8 Alt. B Alt. C 1971 October November December 460.8 463.6 1972 March Per Cent Annual Rates of Growth October November December 3.0 1.0 3.5 4th Q. 1971 1st Q. 1972 2.5 4.5 3.0 2.0 4.0 3.0 3.0 5.5 6.5 3.0 5.0 6.5 4.0 6.5 6.5 4.5 7.5 4.0 7.5 5.0 5.5 5.5 6.5 6.0 7.0 Adjusted Credit Proxy Alt. A Alt. B Alt. C October November December Alt. A Total Reserve Alt. C Alt. B 355.1 358.0 357.5 355.1 358.5 358.7 355.1 358.9 359.7 31.7 32.0 31.9 31.8 32.1 32.0 31.8 362.6 364.6 367.1 32.5 32.7 33.0 -14.5 10.5 -14.0 12.5 -13.5 14.5 - 6.0 - 4.0 - 2.5 - 3.5 8.5 - 2.0 9.5 - 0.5 32.2 32.1 1972 March Per Cent Annual Rates of Growth October November December 4th Q. 1971 1st Q. 1972 5.5 10.0 -1.5 4.5 5.5 5.5 11.5 0.5 6.0 6.5 5.5 13.0 2.5 7.0 8.0 11.5 -9(7) Short-term credit demands are likely to expand in the fourth quarter both for seasonal reasons and as business activity improves cycllically. But we would not expect such demands to be reflected in much, if any, nearterm upward pressure on Treasury bill or private short-term rates. The peak period of seasonal pressure on short-term markets normally comes after mid-November. Also, the Treasury's mid-November refunding--to be announced on October 27--may reduce short-term market pressures by emphasizing debt lengthening, perhaps partly through incorporation of an advance refunding. On the other hand, the Treasury could announce in conjunction with the refunding that it will raise cash around mid-November through a bill issue. On balance, we would expect the 3-month bill rate to be in a 4-1/4--4-3/4 per cent range between now and the next meeting of the Committee, given the money market specifications of alternative A. This bill rate range assumes no substantial bill sales by foreign central banks. (8) An easing of money market conditions that entailed a Federal funds rate dropping appreciably below the 5 per cent discount rate for a sustained period could well lead to significant declines in other market rates, particularly if expectations of an accompanying discount rate cut should become pervasive. The lower the Federal funds rate were to drop-- and particularly if it moved into the range of alternative C--the greater would be the possibility of a large speculative build-up in bond positions, especially during this forthcoming Treasury financing period. Such a build-up would carry with it the potential for a sharp subsequent market reversal or for the need to expand money and credit rapidly to forestall such a reversal. -10(9) The growth rate in M1 is expected to remain quite small in October and November under all three alternatives considered here. However, in the course of the ensuing several months money growth is expected to pick up to a more normal rate in relation to projected GNP expansion. The exact timing is particularly hard to predict, though, depending as it does on when the public completes the readjustment of its cash position following the very large, partly precautionary build-up of cash balances in the spring and early summer. The timing and extent of this readjustment is especially uncertain in light of the limited degree to which Phase II has been spelled out thus far. (10) Our best present estimate is that under the money market conditions of alternative A, M 1 will grow in the first quarter of next year at a 4-1/2 per cent annual rate following the 2-1/2 per cent rate indicated for the fourth quarter. Under the easing alternatives, money growth would accelerate more as lower interest rates themselves tended to increase the public's demand for cash. For alternative B, the annual rate of money growth rises from 3 per cent in the fourth quarter to 6 per cent in the first quarter,.andfor alternative C from a 4 per cent annual rate to a 7-1/2 per cent annual rate over the same period. (11) The bank credit proxy in the fourth quarter is expected to grow less rapidly than in the third quarter under any of the alternatives; under alternative A, the growth rate is projected to drop below 5 per cent. The slowing in growth reflects mainly a turn-around in the availability of -11U.S. Government deposits to finance credit expansion; these deposits are expected to decline irregularly in the fourth quarter following a substantial rise in the third. Growth in time deposits other than large CD's is expected to remain moderate in the fourth quarter, with growth rates somewhat larger under alternativesB and C as a result of the lower market interest rates likely to develop. (12) A fairly sizable expansion in bank CD's is anticipated between now and year-end, although the growth rate is likely to be less than the exceptional September pace. Somewhat stronger business loan demands, assuming GNP growth as projected in the Greenbook, and a willingness to acquire securities in anticipation of declining long-term market interest rates are expected to encourage banks to issue CD's. It is likely, though, that banks will lower CD offering rates if shortterm market rates decline, but not so rapidly as to forestall a somewhat greater increase in CD's in November under alternatives B and C than under alternative A, with the additional funds used to build up positions in securities. -12- Possible directive language (13) This section presents possible language for the second paragraph of the directive for the three alternative policy courses discussed above. All three alternatives include a qualifying instruc- tion to the Manager to take account of the forthcoming Treasury refunding, the terms of which are expected to be announced on October 27, as noted in paragraph (7). In addition, in all three alternatives it is proposed to delete the instruction to take account of developments in capital markets, given the recent strengthening of those markets. Finally, in alternatives B and C--in which the primary instruction is oriented toward the monetary and credit aggregates rather than money market conditions--the objective is described in terms of growth "over the months ahead." Restoration of tnat phrase is suggested on the assumption that, after focusing on the near-term at its September meeting, the Committee will now wish to return to its more customary time-horizon for policy. (14) Alternative A. This language is proposed for possible use if the Committee decides to call for maintenance of prevailing money market conditions, subject to a proviso clause. "To implement this policy, [DEL: achieve to seeks Committee the moderate account taking aggregates, credit and monetary in growth of markets.] capital in developments System open market operations until the next meeting of the Committee shall be conducted with a and] reserves bank achieving view to [DEL: objective] that with consistent money market conditions; [DEL: MAINTAINING ABOUT THE PREVAILING PROVIDED -13- THAT SOMEWHAT EASIER CONDITIONS SHALL BE SOUGHT, OF THE FORTHCOMING TREASURY FINANCING, TAKING ACOUNT IF IT APPEARS THAT THE MONETARY AND CREDIT AGGREGATES ARE FALLING SIGNIFICANTLY BELOW THE GROWTH PATHS EXPECTED." If the Committee adopts this alternative, it may wish to consider the money market conditions noted for alternative A in paragraph (5) as a description of "prevailing conditions", and for purposes of the proviso clause to adopt the aggregate growth paths discussed earlier in connection with alternative A as the "expected" paths. The proviso clause has been formulated in one-way terms, guarding against significant shortfalls but not excesses, on the assumption that the Committee would not want money market conditions to be tightened in the coming period if M1 and M2 should appear to be expanding on paths above those projected, which represent comparatively low growth rates for the fourth quarter. (15) Alternative B. This language is proposed for possible use if the Committee decides to seek the growth rates for the aggregates over the months ahead discussed earlier in connection with alternative B, including a fourth-quarter rate for M 1 of 3 per cent and moving up to a 6 per cent path in the first quarter. "To implement this policy, the Committee seeks to achieve account taking , moderate growth in monetary and credit aggregates [DEL: of developments in capital markets] 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 -14money market conditions consistent with that objective, TAKING ACCOUNT OF THE FORTHCOMING TREASURY FINANCING." (16) Alternative C. This language differs from that of alternative B in indicating that the Committee seeks "actively to promote" rather than "to achieve" moderate growth in the aggregates over the months ahead. It is proposed for possible use if the Committee decides to pursue the more aggressive course contemplated by the specifications given earlier for alternative C. "To implement this policy, the Committee seeks ACTIVELY to PROMOTE [DEL: achieve] moderate growth in monetary and credit markets] capital in developments of account taking , aggregates [DEL: 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, TAKING ACCOUNT OF THE FORTHCOMING TREASURY FINANCING." -15- Alternative Weekly Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) October November Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C 20 27 227.8 229.3 227.8 229.3 227.8 229.4 459.3 461.0 459.3 461.0 459.3 461.1 3 229.1 228.4 228.0 229.2 228.6 228.2 229.3 228.7 228.4 460.4 460.2 460.1 460.5 460.5 460.4 460.5 460.4 460.5 10 17 Credit Proxy Alt. B Alt. A Alt. C Total Reserve Alt. A Alt. B Alt. C October 20 27 354.5 356.9 354.5 357.0 354.5 357.0 31.7 31.8 31.7 31.8 31.7 31.9 November 3 10 17 357.9 358.2 358.0 358.1 358.8 358.5 358.2 358.7 31.7 31.9 32.2 31.7 31.9 32.3 31.8 32.0 32.3 358.8 -16Total and Nonborrowed Reserve Paths (Daily averages in millions of dollars, seasonally adjusted) Total Reserves Nonborrowed Reserves Alt. A Alt. B Alt. C Alt. A Alt. B Alt. 31,747 32,025 31,860 31,756 32,098 31,986 31,783 32,166 32,103 31,359 31,601 31,461 31,412 31,774 31,687 31,501 32,042 32,004 32,521 32,749 33,022 32,121 32,449 32,922 -11.0 14.0 - 3.5 -8.0 20.5 -1.5 C 1971 October November December 1972 March Per Cent Annual Rates of Growth 1971 October November December 4th Q. 1971 1st Q. 1972 -12.0 10.5 - 6.0 -11.5 12.5 - 4.0 -11.0 14.5 - 2.5 -13.0 9.5 - 5.5 - 3.5 8.5 - 2.0 9.5 - 0.5 11.5 - 3.0 8.5 4.0 11.5 9.5 Weekly Paths--Seasonally Adjusted Nonborrowed Reserves Total Reserves Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C October 20 27 31,677 31,782 31,677 31,832 31,677 31,882 31,343 31,242 31,343 31,392 31,343 31,642 November 3 10 17 31,653 31,890 32,208 31,703 31,948 32,278 31,753 32,006 32,344 31,265 31,477 31,812 31,415 31,635 31,982 31,665 31,893 32,248 Weekly Paths--Not Seasonally Adjusted Nonborrowed Reserves Total Reserves Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C October 20 27 31,101 30,764 31,101 30,814 31,101 30,864. 30,701 30,364 30,701 30,514 30,701 30,764 November 3 10 17 30,898 31,076 31,300 30,948 31,133 31,370 30,998 31,191 31,435 30,498 30,676 30,900 30,648 30,898 31,091 31,335 30,833 31,070 STRICTLY (FR) CONFIDENTIAL CHART 1 10/15/71 MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS - 23 220 It, I - PATH -35% -210 (10/13/71) I Ill II I /1 I BROADER MONEY SUPPLY 5 5% PATH i',/i (10/13/71) 197'0 1971 I i _____ J A S 0 N D 71 - Actual - - Currently Projected --- Wkly Path, indicated at FOMC Meeting (9i21/71) Z- Longer Run Path CHART 1A STRICTLY CONFIDENTIAL (FR) 10/15/71 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS -355 364 -345 -360 4.5% PATH 356 352 -1348 344 I I I 1 .1 I TOTAL RESERVES I 1971 1970 , I J A S '0 N O '71 - Actual Currently Projected --- Wkly Path, ndicated at FOMC Meeting (9/21/71) - Longer Run Path 10/15/71 CHART 2 INTEREST BEARING SOURCES OF BANK FUNDS BILLIONS OF DOLLARS 280 S260 TOTAL TIME AND SAVINGS DEPOSITS -240 -220 200 TIME AND SAVINGS DEPOSITS OTHER THAN CD'S s CO'S- 20 0 NONOEPOSIT SOURCES DE 1970 30 - S10 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 hA A AA,,A WEDNESDAY GOVERNMENT BO 20 YEAR AVERAGES I I 1 I 1970 1971 l l1 1. 1 1970 I 1 I 1 1 I 11 1971 I1 STRICTLY CONFIDENTIAL (FR) Table 1 PATHS OF KEY MONETARY AGGREGATES Period 1 Path as of 2 Actuals & 3 Current Proj Sept. 21 Path as of sept. 21 4 Actuals & Current Proj Total Reserves Adjusted Credit Proxy Broad Money Supply (M2 ) 2/ Narrow Money Supply (MI) 1/ October 15, 1971 5 Path as of sept. 21 6 Actuals & Current Prol 7 Path asof Sept. 21 8 Actuals & CurrentProl Monthly Pattern in Billions of Dollars 1971' Apr. May June 221.1 223.9 225.6 442.0 447.3 451.4 341.7 343.8 345.7 30.8 31.3 July Aug. Sept. 228.4 227.5 228.0 227.3 458.0 454.1 455.9 456.5 353.4 348.0 351.0 353.5 32.1 31.3 31.7 32.1 Oct. 229.3 (227.9) 460.5 (I459.0) 355.2 (355.1) 32.1 (31.7) 31.3 Annual Percentage Rates of Change--Quarterly and Monthly 1971: 1971: 17.8 12.6 8.4 11.3 Ist Qtr. 2nd Qtr. 3rd Qtr. s.0 3.0 6.0 4.5 Apr. May June 9.3 15.2 9.1 12.1 14.4 11.0 July Aug. Sept. 1.5 10.1 2.6 -3.7 7.2 4.8 1.6 4.5 ( 3.0) (6.5) Oct. 5.5 6.5 9.0 10.9 6.5 9.0 11.0 6.6 11.0 10.4 2.7 17.0 0.2 5.3 7.4 6.6 0.3 8.0 8.0 10.3 8.5 17.0 14.1 16.0 6.0 (5.5) -1.0 (-12.0) Weekly Pattern in Billions of Dollars 1971: Aug. Sept. 25 228.3 456.4 353.8 31.4 1 227.5 227.8 455.9 456.6 455.8 456.1 456.4 31.9 353.1 353.1 353.8 353.8 353.9 352.9 353.0 31.8 32.1 457.4 457.6 459.3) 354.4 353.6 356.0 353.2 353.8 (354.5) 32.0 32.1 32.1 8 15 29 229.0 230.6 226.8 226.7 458.7 460.9 6 13 pe 20 229.2 228.8 229.4 226.9 226.7 (227.9) 459.8 459.7 460.8 22 Oct. 227.1 32.3 I- NOTES: 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. i, plus time deposits other thai large Ch's. 2/ 32.2 31.5 32.3 31.9 31.7 (31.7) ______________ pe-Partially estimated. FR712-D Rev2/16/71 STRICTLY CONFIDENTIAL (FR) Table 1-A PATHS OF KEY MONETARY AGGREGATES October 15, 1971 Monthly Pattern in Billions of Dollars 1971, Apr. May Tuhe 3. 248.3 251.4 254.4 July Aug. Sept. 6.2 3.7 6.1 6.3 261.2 256.8 258.2 261.6 229.6 226.6 227.8 229.2 Oct. 5.7 263.6 (265.0) 231.2 (231.2) 5.4 4.2 ( 4.6) 221.0 223.4 225.8 27.3 27.9 28.6 5.1 4.1 4.5 30.1 30.3 32.4 4.3 3.9 4.1 ( 4.6) (33.8) I I Annual Percentage Rates of Change--Quarterly and Monthly 1971: 1971: 1st Qtr. Ind Qtr. 3rd Qtr. 10.5 27.3 13.5 11.3 6.5 27.2 13.7 6.0 14.8 13.0 12.9 Apr. May June 10.7 15.0 14.3 July Aug. 9.5 4.3 6.4 7.4 8.5 (10.5) Sept. 14.0 11.3 6.5 15.8 Oct. 11.0 (15.5) Weekly Pattern in Billions of Dollars 1971: Aug. 25 8.2 258.7 228.2 30.5 3.7 Sept. 1 8 15 22 29 8.0 7.5 8.0 5.5 4.5 261.5 262.2 259.1 260.3 260.6 262.0 263.2 229.7 230.3 228.4 228.8 228.7 229.3 229.7 30.8 31.5 31.9 32.7 33.5 4.0 3.8 3.7 4.1 4.5 4.8 4.3 (3.9) 262.7 263.2 263.9 263.4 264.5 (265.4) 210.6 230.9 231.4 230.5 230.9 (231.5) 32.8 33.6 (33.9) Oct. NOT O : 6 13 pe 20 pe-Partially estimated. 1, Annual rates of change other than those for the past Data shown in parenthesis are current projections. ~4- are rounded to the nearest half per cent. , 1 4.3 4.7 (4.6) L ~ FR 712-K Rev 2/16/71 CONFIDENTIAL (FR) Table 2 AGGREGATE RESERVES AND MONETARY VARIABLES October 15, 1971 RETROSPECTIVE CHANGES, SEASONALLY ADJUSTED (Annual rates in per cent) Semti-annua lly 1st Half 1970 2nd Half 1970 - +13.0 + 1.9 +17.1 + 3.3 +20.0 + 3.5 +12.9 + 5.9 + 4.8 + 7.8 + 4.6 + 5.3 + 4.7 + 7.8 +27.9 + 4.7 +10.6 +12.8 + 1.7 1st Half 1911 + 8.9 + 8.2 +13.5 + 8.8 +10.3 + 9.4 +10.5 420.8 +20.8 -18.2 Quarterly 3rd Qtr. 1970 4th Qtr. 1970 +19.1 +24.4 + 9.4 +24.1 +15.1 +17.2 + 8.3 +6.1 +3.4 + 3.3 +5.8 4 6.7 + 2.7 +32.2 +21.8 + 9.3 -16.2 +11.6 +20.4 +11 .0 + 5.3 +17.0 + 9.6 +10.9 + 6.5 +8.9 +9.6 + 6.6 +11.3 + 9.6 + 8.9 +11.8 +27.3 +13.5 +23.3 +17.3 -24.7 -12.5 +10.4 +10.9 + 9.7 + 9.0 +3.0 +6.3 + 2.1 +11.3 +12.4 +31.6 +10.1 +13.1 +21.4 + 1.1 + 7.0 +16.5 + 1.1 +2.8 +6.2 + 7.5 +4.9 +4.9 - + 4.4 + 2.2 + 6.6 +20.3 +15.1 +28.8 +10.6 + 9.4 +14.5 +32.4 -28.7 +58.1 +16.1 +19.3 +14.9 +10.5 +12.9 4 8.9 + 1.1 +14.0 +11.6 + 7.4 + 9.8 + 9.7 - 1.4 +16.0 +12.2 +25.5 +28 6 +25.9 +25.1 +18.5 +24.9 - 9.0 -10.9 -55.2 + 5.3 I 7.4 + 6.6 + 9.3 +15.2 + 9.1 +12.0 + 9.5 + 7 1 + 7.8 +17.6 + 9.7 +10.7 +15.0 +14.3 +21.8 +14.2 +15.1 + 4.4 -15.8 -26.3 4 8.0 +10.3 + 8.5 +10.1 +2.6 - 3.7 +11.7 +2.3 + 4.6 + 9.6 + 2.7 - 6.1 +11.3 + 6.5 +15.8 +15.9 + 8.4 +12.5 -32.1 - 1.7 31.6 1st Qtr. 2nd Qtr. 1971 1971 3rd Qtr. 1971 0.7 + 6.6 +11.0 p 1970--Oct. Nov. Dec. + 3.6 +18.4 1971--Jan. Feb. Mar. +12.2 +11.4 + 9.2 Apr. May June + 2.7 +17.0 + 0.2 + 9.7 +12.4 - 6.2 +17.2 411.1 +5.3 July Aug. Sept. p + 0.3 +14.7 +16.0 -13.1 +16.1 +29.8 4 8.8 +11.9 + 8.3 NOTE: - 1.9 -22.8 + 8.8 +15.1 - 8.8 0.7 p - Preniitnary. Aggregate reserve series have been adjusted to eliminate changes in percentage reserve requirements against deposits, but reserve requirements FR 712- E 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 October 15, 1971 SEASONALLY ADJUSTED (In millions of dollars) 1970: 1971: (In billions of dollars) 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 Sept. 28,041 28,585 29,240 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 48.5 164.5 164.8 165.7 222.2 225.0 230.4 Jan. 30,229 30,515 30,748 323.9 329.1 333.2 214.8 217.3 219.4 165.5 167.7 169.4 235.3 Mar. 29,801 30,176 30,398 30,029 Feb. Apr. May June 30,816 31,253 31,257 30,644 30,961 30,801 30,611 30,998 221.1 223.9 225.6 50,5 50., 31,046 336.6 339.7 341.2 170.5 173.0 174.4 31,266 31,650 32,072 30,465 30,873 31,639 31,094 31,473 31,906 343.7 347.1 349.5 227.5 228. 0 227.3 51.7 51.8 52 0 175.8 31,7/6 31,473 31,761 31,415 31,022 30,980 30,572 30,679 31,357 31,490 31,507 31,349 344.2 344.4 346.8 350.1 226.7 228.7 228.7 228.3 51.8 51.9 51.9 51.7 175. 0 349.9 350, 0 350.2 348.8 348.4 227.5 227.8 227.1 226.8 226.7 51.8 52.0 52.0 51.8 175.8 175.8 175.1 174.8 174.9 226.9 52.1 174.8 July Aug. July Aug. Sept. 30,255 30,534 48.7 48.9 49.2 49.6 50.0 51.2 21.7 191.3 184.2 196.8 315.8 321.9 324.5 23.2 23.9 26.0 199.1 201.1 204.4 324.8 326.7 331.2 246.1 27.1 27.4 27.8 208.2 213.5 218.3 334.1 337.1 340.2 248.3 251.4 254.4 27.3 27.9 28.6 221.0 223.4 225.8 341.7 343.8 345.7 256.8 258.2 261.6 30.1 30.3 32 4 226.6 227.8 229.2 348.0 351.0 353.5 227.4 227.7 227.6 228.2 348.1 348.7 350.5 353.8 27.9 27.8 27.9 28.4 228.4 228.8 228.7 229.3 229.7 353.8 353.8 353.9 352.9 353.0 28.2 28.3 28.2 28.4 28.5 230.5 353.2 28.5 240.9 176.2 175.3 WOek endino: 1971: Aug. Sept. Oct. NOTES: 4 11 18 25 31,918 32,319 32,205 31,542 32,268 I 8 15 22 29 6 3.... 31,899 31,225 31,633 31,779 31,338 31,862 31,634 32,109 32,048 31,674 31,865 31,649 31,667 ______ 348.9 = _______ ________I____ I 52.0 257.5 257.4 176.8 176. 8 176.6 257.9 258.7 259.1 260.3 266.6 262.0 263.2 263.4 I t I I Aggregate reserve series have been adjusted to eliminate changes in percentage reserve requirements against deposits, but reserve requirements on Euro-dollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements, bank-related commercial paper, and EurOdollar borrowings of U. S. banks. Weekly data are daily averages for statement weeks. Monthly data are daily averages except for nonbank commercial paper figures which are for last day of month, p-Preliminary. FR 712 - F Table 4 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) Member Period Free reserves Excess reserves Banks R e s e r v e Major banks Total Mtl 8 N.Y. Borrowings C i t v Other Country Outside N.Y. Monthly (reserves weeks ending in): 1970--January February March April May June July August September October November December 759 916 751 687 765 736 -1,134 706 - 374 - 274 199 84 169 210 129 178 159 171 183 175 235 193 210 264 928 1,126 880 865 924 907 1,317 881 609 467 409 348 148 106 90 227 165 140 218 143 101 12 42 36 287 317 225 331 241 289 460 278 115 40 17 16 232 289 287 119 228 217 348 273 274 313 294 265 261 414 278 188 290 261 291 187 119 102 57 30 1971--January February - 140 71 238 264 378 335 45 29 36 30 262 248 35 29 - 120 2 6 303 672 633 323 192 154 218 211 158 194 214 312 152 212 514 830 827 537 41 15 78 103 77 153 37 17 9 36 85 223 130 104 238 119 60 159 270 318 249 16 9 38 167 260 226 147 - 80 58 3 128 277 208 81 48 197 150 84 176 -17 -42 --1 34 184 127 79 86 13 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 16 51 56 2 9 16 23 - 361 80 149 409 285 73 254 210 646 153 403 619 171 46 86 103 100 27 4 161 217 25 152 202 158 55 161 153 30 - 518 232 750 107 132 203 308 7 14 21 28 - 384 986 839 478 277 5 282 67 661 991 1,121 545 -252 47 9 149 309 344 88 257 189 397 236 255 241 333 212 March April May June July Aug. Sept. p 1971--Apr. May June July 7 14 21 28 4 - 330 434 764 43 122 307 292 11 - 566 27 593 -- 47 328 218 18 25 - 955 680 224 91 1,179 771 338 229 254 97 326 313 261 132 Sept. 1 8 15 22 2 9 p - 382 560 210 390 73 324 205 247 - 61 353 706 765 457 329 426 52 286 97 49 37 370 306 231 106 230 185 173 130 88 159 Oct. 6 p 13 p - 13 349 297 101 310 450 5 113 112 127 164 109 Aug. p - Preliminary. 99 --86 -29 101 Table 5 SOURCE OF FEDERAL RESERVE CREDIT Retrospective Changes (Dollar amounts in millions of dollars, based on weekly averages of daily figures) Total Federal Reserve credit S(Excl. float) Period Year: 1969 (12/25/68-12/31/69) 1970 (12/31/69-12/30/70) +5,539 +3,351 U.S. Government securities Total holdings +5,192 Bills 1/ +4,279 ( -) +3,220 (- 143) + 707 +1,180 + + + 124 84 113 + + 71 56 ) + 27 57) 87) 144) + 35 + 109 + + 91 15 7 14 21 28 + + - 145 86 423 43 + + + + 4 128 360 30 May 5 12 19 26 + + + + 712 272 304 144 + + + + 384 173 400 256 2 9 16 23 30 57 2 - 418 47 2 106 +1,059 + 7 14 + + + - June July 21 28 Aug. Sept. - 13 439 463 + 348 +1,151 373 74 562 359 + 131 + 208 + + 25 27 101 50 - ) - ) -- ) ) - ) -- + - 67 63 + - 35 28 ) -- - ) 141 1 - 73 + 296 + + + 397 -- ) 1 + + + 399 309 54 320 595 + 282 --- ) ) - 145 + - 655 299 13 206 124 Bankers' acceptances 39) 39) + + 6 + - Federal Agency Securities Repurchase Outright agreements ) - 4 11 18 25 8 15 22 29 Oct. Other +4,276 1971--Apr. Repurchase agreements - ) 70) 70) S 25 145) 145) - 191 + 307 - ) + + 394 - ) + -- ) 25 52 39 5 153 L Figures in parenthesis reflect reserve effect of match sale-purchase agreement. Includes effect of changes in special certificates of $ +94 million of the week of June 9, of the week of June 23. Preliminary. I $ +416 million of the week of June 16, and $ -510 million Member banks borrowings + 245 - 884 Table 6 MAJOR SOURCES AND USES OF RESERVES Retrospective and Prospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) of r e s e r v e s u pp 1 y n a f f e c t F a c t o r s Federal Reserve Gd Currency rForeign I Other nonmember credit (excl. o outside erat s Float deposits deposits and Poriod float) 1/ banks (S 1969 (12/25/68-12/31/69) 1970 (12/31/69-13/30/70) 1971--Apr. May June Jult Aug. Sept. Oct. 45,539 +3,351 in ign eraonand gold loans e f f cates c t on F.R. accounts Change Bank use in total qird reere f reserves xc res s reserves reserves) -+1,150- -2,676 -3,122 - 813 + 773 + 241 + 667 + + 54 1 898 -1,655 +1,448 +1,163 +1,340 +1,257 + 108 - 94 14 14 21 + + 173 217 187 + 270 45 313 + + 171 24 440 - 99 - 69 - 127 7 14 21 + + 279 275 348 ---- 257 -483 - 414 - 243 + 249 - 131 + 235 + 241 + 301 + + 28 + 54 -- + - 384 - 129 351 465 69 -- 580 10 + 1 - 23 + 219 + 252 - + 307 - 248 + 83 + 218 + - 497 211 421 177 + - 14 13 5 25 + - 72 99 45 315 + + - 623 696 278 116 + + - 306 561 406 188 + 317 - 135 - 128 + 72 -36 1 + 33 28 228 + + 30 390 327 + 81 178 146 + 111 - 212 + 181 33 5 12 19 26 + + + + 771 201 503 115 -- + + 2 9 16 + + 305 974 202 --- 80 - 240 -378 + 169 + 522 + 398 - 327 + 291 - 122 + + 23 + 160 -- -125 - 648 + 291 - 5 + 33 - 294 - 250 - 44 30 +1,156 - + - 776 - 334 - 11 - 28 + 373 + 351 + 22 -616 - 54 + 376 - 4 - 43 + 21 - 24 + 45 - - 244 + 217 + 8 + 82 - 59 + 213 - 272 358 + 176 + 11 - 4 + 110 + 678 + 401 + 277 895 + 204 - 453 + 29 - 27 - 309 - 94 - 215 51 -168 + 266 17 - 153 - 65 + 37 5 - 89 29 + - 271 564 - 179 74 + 450 - 490 - 114 + 275 + 78 + 197 - 494 - 361 - 133 + 408 + 175 + 233 + - 336 4 + - 455 46 - 119 + 42 - 171 229 362 7 + 362 -- 14 + 364 - 21 + 743 -- 28 - 957 -- 4 11 + - 335 204 - 18 + 483 - 384 + 125 + 178 - 7 - 1 25 - 116 -- + 55 - 113 + 16 - 8 - 332 1 + 381 - + 392 - 45 - 280 - 10 - 31 8 15 + - 670 387 -- - 191 190 - 76 - 36 + 163 + 326 + + 29 26 + 57 256 22 - 575 -- - 238 - 374 + 683 - 11 + 25 - 491 - 183 - 308 29 p + 839 - + 878 - 242 - 719 + 4 - 39 + 722 + 308 + 414 6 p 13 p + - 575 217 -- - 190 372 - 139 + 52 + + 37 49 + 102 85 + 10 326 + - 66 130 - 56 - 196 - + 86 / Pot retrospective detaile, see Table 5. 2/ Includes $400 million in special drawing account, p -Prelimtnary 483 97 76 Table 7 Reconciliation--Money supply and Credit Proxy Adjusted (Billions of dollars, not seasonally adjusted) Levels, J 1971 1 Item 'Marchl June 1 Sept.p Dollar Change 2nd Qtr. 1971 3rd Qtr. 1971 1. Money Supply--M 1 217.4 223.6 225.7 6.2 2.1 2. Plus: Time deposits other than large CD's 218.9 226.1 229.2 7.2 3.1 Equals: Money supply--M 2 436.3 449.6 454.9 13.3 5.3 U.S. Gov't. deposits at member banks 4.5 4.4 6.2 -0.1 Net domestic commercial bank deposits at member banks 4.3 4.0 4.4 -0.3 0.4 28.0 28.4 32.1 0.4 3.7 3. Plus: 4. 5. 6. Large CD's 7. Nondeposit funds 1/ 7.0 4.5 4.1 -2.5 8. Time deposit of U.S. Gov't and commercial banks 1.9 1.9 2.2 -- 0.3 F.R. Float 2.7 2.7 3.0 Demand deposits at nonmember banks 38.3 39.9 40.8 1.6 0.9 Time deposits at nonmember banks 56.5 58.8 60.8 2.3 2.0 Currency component of the money supply 49.5 51.1 52.0 1.6 0.9 Deposits at Edge Act. Corps., agencies and foreign branches 0.8 0.7 0.8 -0.1 0.1 Foreign deposits at F.R. 0.4 0.4 0.4 -- 339.2 344.7 9. -0.4 Less: 10. 11. 12. 13. 14. Equals: 15. Credit Proxy Adjusted 352.1 p - Preliminary. Includes borrowings from banks own foreign branches, commercial paper and 1/ other minor items. NOTE: Sums of levels and changes may not add because of rounding. Table 7A Reconciliation--Money Supply and Credit Proxy Adjusted (Billions of dollars, seasonally adjusted) Levels, 1971 2nd Qtr. 1971 Dollar Item 1. Money supply--M 1 2. March IJune Sept.p I Change 219.4 225.6 227.3 6.2 3rd Otr. 1971 Percentage Dollar Percentage Change 11.3 Change 1.7 Change 3.0 Plus: Time deposits 218.3 225.8 229.2 7.5 13.7 3.4 6.0 437.6 451.4 456.5 13.8 12.6 5.1 4.5 U.S. Gov't. deposits at member banks 4.8 3.9 6.3 -0.9 Net domestic commercial bank deposits at member banks 4.7 4.3 4.3 -0.4 27.8 28.6 32.4 0.8 3.8 7.0 4.5 4.1 -2.5 -0.4 8. Currency component of the money supply 50.0 51.2 52.0 1.2 0.8 9. Deposits at nonmember banks, and other items 2/ 91.8 95.7 98.0 3.9 2.3 340.2 345.7 353.5 5.5 other than large CD's 3. Equals: Money supply-- Plus: 4. 5. 6. Large tD's 7. Nondeposit funds 1/ 2.4 Less: Equals: 10. Adjusted Credit Proxy 6.5 7.8 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/ 9.0 

Federal Reserve (1971, October 18). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19711019

@misc{wtfs_bluebook_19711019,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1971},
  month = {Oct},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19711019},
  note = {Retrieved via When the Fed Speaks corpus}
}