Fed Action Resolution Advances
The Senate Banking Committee yesterday approved a measure suggesting that the Federal Reserve system expand the money supply and regularly report to Congress on its plans for doing so Û¢ The measure is similar to a ÛÏsense of CongressÛ reso-luton already approved by the House. The resolution next goes to the full Senate. Tt would not have the force of law.</br></br>The resolution suggests that the Federal Reserve ÛÏpursue policies in the first half of 1975 so as to encourage expansion in the monetary and credit agregates appropriate to facilitating prompt economic recovery -and maintain long-run growth of the monetary and credit agregates commensurate with the economyÛªs long-rim potential to increase production, so' as to promote effectively the goals of maximum employment and stable prices and moderate long-term interest rates.Û</br></br>However, at the request of Fed chairman Arthur Burns, the committee included in the resolution a new section freeing the Fed from complying with the goals of the resolution ÛÏif the Board of Governors and the Open Market Committee determine they cannot or should not be achieved because of changing conditions.Û</br></br>Chairman William Prox-mire (D-Wis.) called the resolution ÛÏvery significantÛ in that it provides procedures to better inform Congress and the public about the importance of monetary policy on the economy as a whole.</br></br>Proxmire said he believes that even though the federal government has a very stimulative tax policy, interest rates will rise and recovery will be aborted if the Federal Reserve system does pot substantially increase the money supply.