Honcho5 -
The Federal Reserve Board is trying to grow the money supply: by
increasing commercial lending. It is regarded as a more effective
tool than other options, which largely consist of
1. running a larger Federal government deficit - which is not under
control of the Federal Reserve Board
2. buying back government bonds (to put more cash in the economy)
Douglas Ruby's Digital Economist page has a good overview of the
process and lots of resources and links to explain how the Fed policy
interacts with other government practices:
The Digital Economist
"The Money Supply Process and Interest Rate Determination" (undated)
http://www.digitaleconomist.com/ms_4020.html
It is the Federal Open Market Committee, which consists of the 12
members of regional Federal Reserve banks, that actually directs
adjustments to money supply targets. Though a cut in the basis rate
is a distinct public action, their meetings and discussions are
private -- so you won't see a current 3-month target. In an economy
such as the U.S., which is highly liquid and also has derivatives
(futures and options), the discussions and targets are kept
confidential to avoid rampant speculation.
However, minutes of a meeting are available on the Thursday after each
meeting, so you can see the minutes of this week's meeting already on
the Federal Reserve page:
Federal Reserve Board
"Federal Open Market Committee" (June 25, 2003)
http://www.federalreserve.gov/FOMC/
Transcripts of the meeting are confidential for a 5-year period
afterward, in an attempt to keep the thoughts of each of the committee
members on key economic factors out of the public microscope.
Nonetheless, you'll find many analysts trying to predict how the
continual release of unemployment, stock market, inflation, home
starts, borrowing and other statistics are effecting the thinking of
each of the governors. And of course, every time Alan Greenspan,
chairman of the Federal Reserve, speaks to Congress about what
direction he sees the economy taking, financial markets react.
You can also find annual reports from both the Federal Reserve and the
FOMC, which give a better idea of what targets were for the
most-recent year:
Federal Reserve Board
"Annual Reports" (Feb. 26, 2003)
http://www.federalreserve.gov/generalinfo/foia/annualrpts.cfm
Google search strategy:
"Federal Reserve" + "money supply targets"
"Federal Open Market Committee"
If any part of this answer is unclear, please request a clarification
before rating it.
Best regards,
Omnivorous-GA |
