Word: keeps
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Dates: during 1970-1979
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...itself, the accelerating demand for credit would have quickly pushed interest rates far beyond the target that the Federal Reserve had set. For instance, interest on six-month Treasury bills, which is used as a guide for regulating interest on certain bank deposits, would have leaped alarmingly. To keep money markets stable, the Fed's so-called Open Market Desk in New York was forced to begin making more and more money available to banks in order to satisfy demand for funds. Indeed, though the Fed's own inflation-cooling monetary growth target was 4.5%, which is just about right...
...vacation in Miami, or to finance a corporate takeover on Wall Street. The policy danger posed by this credit proliferation is that a tight money strategy may indeed cut down the growth of the Fed's "official money," but spending would just keep on surging and spurring inflation anyway. Urges Wall Street Economist Henry Kaufman, an internationally respected expert on interest rates and credit: "What we need now is a new monetary growth target that I call the 'debt proxy.' It would include not just currency and deposits but all private domestic debt as well, a figure that is already...
...sooner were the Fed's money-tightening moves announced than finance men began huddling with their lawyers, looking for ways to circumvent the new rules. Reports TIME'S European economic correspondent Friedel Ungeheuer from Brussels: "The game of the week is finding loopholes in the Fed's effort to keep Eurodollars out of the U.S. Like water finding the same level in connected containers, an ocean of money can flow through even the smallest opening...
...consumer spending shows signs of slowing much at all. In spite of wide agreement among economists that the U.S. is already in recession, September's unemployment level fell to 5.8% of the labor force, down from 6% in August; that decline suggests that businesses are not just continuing to keep factory lines humming, but are even expanding their production in the belief that someone will buy almost anything they can turn...
...chances of such a crunch developing would be somewhat higher if the Federal Reserve continued its now discarded practice of trying to manage the money supply by juggling interest rates Reason: in a slowdown, demand for money necessarily eases off at least somewhat and interest rates subside. But to keep those rates stable, the Fed would wind up slowing and slowing the growth of money until suddenly it would be creating nowhere near enough new money...