The Federal Reserve System and Control of the Money Supply in the 1970s.

The article examines the use of the U.S. Federal Reserve System of money supply in 1970s. The author believes that if the Federal Open Market Committee of the Federal Reserve System (FOMC) viewed the money supply as its primary intermediate target of policy, it would have enacted operating procedures to ensure control of the money supply. The three characteristics required of these operating procedures are reviewed. The author discusses both long-run and short-run money supply targets. The FOMC's decision in choosing operating procedures is rationalized.