Date of Original Version



Conference Proceeding

Abstract or Description

Some of the problems that now confront monetary policymakers or that have been faced in the recent past, are the result of long-term adjustments in the economy. Others are a consequence of past fiscal and monetary operations. The theme of this statement is that recent monetary policy operations have been a main cause of the recent inflation and of the decline in industrial production. Policy operations have been both too large and too variable to achieve the fullest use of resources without inflation. Large increases in the quantity of money and in its growth have been followed by large contractions and then by renewed rates of increases of money that are almost certain to increase the rate of inflation in the near future. It is clear that large, frequent adjustments in policy during the past few years did not prevent inflation in 1966, and have not prevented a reduction in industrial production and in the growth rate of total output in 1967


Statement prepared for the Board of Governors, the Presidents of the Reserve Banks, and the Federal Reserve's consultants.