I AM IMPELLED, after a review of 1960 forecasting records, to warn you that any similarity between what is said here today and what actually develops in 1961 may be purely coincidental. Indeed, about 1960 business forecasts, it may well be said that seldom have so few misled so many by so much. And last year's panel on the outlook for money and capital markets was no exception. The panel was in close general agreement that money would remain tight in 1960; persistent demand pressures in credit markets would cause yields-particularly on short-term securities-to rise to new peaks; the supply of, rather than demand for, credit would continue as the strategic limiting factor in the flow of funds; and, as a result, Federal Reserve policy would remain restrictive through 1960. I recall these conclusions in the light of recent developments, not in any sense to embarrass their authors, for the cloak of embarrassment falls on our whole economic fraternity. How many among us can say that these firmly expressed expectations of financial stringency in a climate of business buoyancy did not summarize our own views as well? Rather, I recall the statements lest we begin to take ourselves too seriously and as an eloquent reminder that, while we have made progress in our understanding of past and current financial market developments, the formula for successful forecasting continues to elude us. There is still another reason for recalling our inadequacies in short-term forecasting, namely, to justify my discussion today of a fundamental longer-range question that has lately come in for increasing attention. However, it is only fair at an outlook session to say something about the near-term outlook, if for no other reason than to provide an opportunity for next year's participants to indicate how wide of the mark I was. My views, then, on mortgage market developments for 1961 are summarized as follows: 1. The supply of investment funds seeking outlets in mortgage markets will exceed the demand. This will be a unique situation compared with earlier postwar periods of financial ease. 2. As the flow of saving expands, the downward pressure on mortgage interest rates will continue-at least during the early part