Regional President Speech

FEDERAL RESERVE POLICY Outline of Lectures by KARL R. BOFP Vice President Federal Reserve Bank of Philadelphia at the GRADUATE SCHOOL OF BANKING Rutgers University New Brunswick, N. J. June 13, 17 and 20, 1955 Introduction Our Common Objective: Stable Economic Growth A. We have a money economy. Purchasing is like casting votes for what we want produced. 1. Want enough votes cast to utilize available resources a. Role of Government b. Role of Federal Reserve System 2. Freedom to cast votes as we wish B. Flow of expenditures = M x V 1. Method of regulating M 2. Fractional reserve system Suggest th^r reread Appendix B of Study 1 - Our Financial System at Work (The Mechanics of Deposit creation) Also Chapter II of Stucty- 2. I. Mechanics of Federal Reserve Operations A. The balance sheet must always balance B. Factors that determine the amount of reserves 1. Non-managed factors Money in circulation Foreign deposits Monetary gold stock Treasury deposits Federal Reserve float (deferred availability cash items minus uncollected cash items) Other deposits (non-member clearing) Other Reserve Bank credit (13b) Other Reserve Bank accounts (capital) Treasury cash holdings (gold) Treasury currency outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 2 - 2. Managed factors Government securities Discounts and advances 3. Major factors in last 25 years II - H C. The volume of Reserves 1. Total reserves 2. Required reserves 3. Excess reserves 4. Free reserves (It isn't only present supply but ease - or difficulty - in getting more and cost!) II. Review of extension problem A. Purpose is to have you increase understanding by following through each of the factors to its effects on reserves B. Accuracy important I Follow directions 1. One-third for filling in tables 2. Two-thirds for questionnairs III. Objectives of policy and related programs A. Objectives (accommodating credit needs - expansionary ) contract!onary) (economic stability) 1. Maximum employment (Basic) 2. Stable price level (short-run correct disorder) 3. International stability B. Related programs and resolution of conflicts C. Guides to current operations D. Measures of immediate results IV. Methods of influencing credit conditions (Wish to influence flow of expenditures by influencing supply, availability & cosi) A. Discount rate and discount administration B. Open-market operations C. Reserve requirements D. Selective credit controls Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 3 - V. Federal Reserve Policy in Operation; Open Market Committee directives to its Executive Committee: "Transactions for the System open market account should be with a view .... A. March 4-5, 1953 "to exercising restraint upon inflationary developments" B. June 11 "to avoiding deflationary tendencies without encouraging a renewal of inflationary developments (which in the near future will require aggressive supplying of reserves to the market)." C. September 24 "to avoiding deflationary tendencies." D. December 15 "to promoting growth and stability in the economy by actively maintaining a condition of ease in the money market." E. March 3, June 23, Sept. 22, 1954 Repeated F. December 7, 1954 Deleted "actively". VI. Comments on Extension Problem Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Outline of Lectures on FEDERAL RESERVE POLICY in course on "Economics of Banking and Business" by KARL R. BOPP Vice President, Federal Reserve Bank of Philadelphia Graduate School of Banking Rutgers University, New Brunswick, N. J. June 13, 17 & 20, 1955 I. Mechanics of Federal Reserve operations A. Bank credit and reserves B. Factors that determine the amount of reserves 1. Non-managed factors 2. Managed factors C. Reserves 1 . Total reserves 2 . Required reserves 3. Excess reserves 4. Free reserves II. Review of Bctension Problem on the Federal Reserve III. Objectives of policy and related programs of action A. Specific objectives and their implications B. Reconcilation of conflicts IV. Methods of Influencing conditions in the credit markets A. The discount rate and discount administration B. Open market operations C. Regulation of reserve requirements D. Selective credit controls V. Federal Reserve policy in operation VI. Comments on Extension Problem Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis QUESTIONS FOR EXTENSION PROBLEM Directions: Answer each of these questions for the period September 30, 1954 - March 31> 1955 and for the period March 31> 1955 - September 30, 1955* I. On the basis of the table "Business Indexes" in the Federal Reserve Bulletin, describe economic developments during the period. II. On the badis of the tables "Security Markets" and "Money Market Rates", describe developments in the financial market during this period. III. Comment briefly on other outstanding economic developments during the period. IV. What was the net effect on member bank reserves of all non­ managed factors during the period? V. What did the Federal Reserve System do during the period to influence ihember bank reserves? VI. On the basis of the table "Deposits, Reserves and Borrowings of Member Banks", indicate what happened to excess reserves, borrowings, and net "free" or "deficient" reserves during the period. (Note: These are monthly averages.) VII. Write a brief essay in which you relate what the Federal 6 Reserve System did (answers 5 and ) to current developments 1 4 (answers - ). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Karl R. Bopp (1955, June 19). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19550620_karl_r_bopp

@misc{wtfs_regional_speeche_19550620_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1955},
  month = {Jun},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19550620_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}