WASHINGTON -- They didn't smoke pipes like Arthur Burns. They didn't talk about punch bowls like William McChesney Martin. Their ripening teen larynxes couldn't match Paul A. Volcker's booming bray. They spoke much more lucidly than Alan Greenspan.
But they did say "irrational exuberance," fret about implicit price deflators and ponder the yield spread between the 30-year Treasury bond and the one-year Treasury bill.
Six seniors from Calvert Hall College High School in Towson JTC rendered a fair enough imitation of the Federal Reserve's top policy committee yesterday to take second place in a national academic competition on monetary policy.
Having won local and regional contests in analyzing economic data and mimicking Fed decision-making, the Calvert boys bellied up yesterday to the big table -- the dark, carved, mirror-smooth expanse at the Fed's C Street headquarters in Washington where the real honchos try to fine-tune the money supply.
They sat in the plush chairs used by the Fed's Open Market Committee, which meets later this month. They walked on the parquet floor and oriental rug regularly trod by Fed Chairman Greenspan. They placed their transparencies on the official Fed audio-visual equipment.
And across a county-size slab of hardwood, they faced Alice M. Rivlin, the Fed's vice chairman; J. Alfred Broaddus, president of the Fed bank in Richmond, Va.; and Donald L. Kohn, director of the Fed's division of monetary affairs. Those three judged the contest.
Bearing the scars of uncounted monetary battles, the judges looked, as much as anything, for empathy and understanding.
"What's the basic objective?" Rivlin asked each team. "What should we try to be doing as we sit here? Should we just try to control inflation?"
She sounded as if she genuinely wanted a teen-age sage to finally deliver the true answer.
The Fed's Open Market Committee meets every six weeks or so to adjust the nation's money supply and, by extension, its short-term interest rates and economic growth.
It's a high-wire act, a tricky balancing job -- with the whole country watching.
Low rates and a rapidly expanding economy can fuel inflation, which, once unleashed, can send misleading commercial signals and eventually cripple growth. But high rates and a flat economy can increase unemployment and slow growth or even cause a recession.
As each team simulated an Open Market Committee debate, the judges sought signs that the students understood, not just the trade-offs of monetary tinkering, but the subtlest nuances and newest evidence in the debate.
The Calvert Hall students nailed it.
They've been reading the Wall Street Journal for months. They've consulted with the Fed's own economists. They log each day's national indicators.
Patrick Venanzi, 17, impressed the judges by mentioning the gross domestic product's inflation component, the "price deflator," and the theory that the consumer price index exaggerates inflation.
Russell Snyder, 17, hit one of Greenspan's concerns, the idea that job insecurity is keeping U.S. workers from demanding big raises.
Jay Williams, 18, touched on another Greenspan concern, the possibility that national demand for products and services is still growing.
Jonathan Turnes, 18, talked about the T-bond yield and "basis points." Michael Triplett, 18, quoted Greenspan's recent remark about investor "exuberance" and cast the Calvert team's deciding vote -- to raise short-term rates another quarter point.
And Jason Medinger, 18, rode the bench in case a teammate gagged on a gross domestic adjective.
The boys and their adviser, Louis Heidrick, a Calvert assistant principal, prevailed over finalist high school teams from New Hampshire and New Jersey, as well as 146 other entrants nationwide. A team from Bryan High School, in Bryan, Texas, won the contest and the accompanying big silver trophy.
This is the second year of the national contest, which the central bank calls "The Fed Challenge."
The Fed is trying to boost the study of the economy and expose more young people to its workings. As a publicity stunt, yesterday's event worked. Besides The Sun, reporters came from the Wall Street Journal, Fortune and Bloomberg News.
Not all 12 Fed districts had students participating. Officials hope expand the field next year, but it may not be easy.
After all, how many high school students can say with a straight face, as one of the New Hampshire contestants did yesterday: "We've been following the G-7 meetings really closely."
But even if they don't produce another Martin, Burns, Volcker or Greenspan -- all present or past Fed chairmen -- yesterday's judges were happy with the contest.
"We'll try to take into account everything you folks said when we get around to the next Open Market Committee meeting," Broaddus said.
And for all you stock and bond investors, in case he was serious: Three of yesterday's teams decided to raise short-term rates a quarter point. And one team stood pat.
Pub Date: 5/02/97