Attacking President Carter in a speech in Chicago last month, Republican Ronald Reagan declared, "We must first recognize that the problem with the U.S. economy is swollen, inefficient government, needless regulation, too much taxation, too much printing press money."

Too much printing press money? Well, the man who has been deciding for the last six years just how much money gets printed says that there isn't enough.

William Wallace, staff director for bank activities at the Federal Reserve, is the man who decides each year just how much currency ought to be printed. The only problem is that for several years the Treasury Department's Bureau of Engraving and Printing has not been able to deliver as much as Wallace would have liked.

Not long ago Wallace sent in the Fed's order for fiscal 1981, which called for printing 4.083 billion notes -- all the currency bills today are called Federal Reserve Notes -- in denominations ranging from $1 to $100, worth a total of $42,553 billion.

But even that enormous number of bills won't be enough to allow Wallace, 47, an economist who used to teach at Duke University, to get started on what he calls "our major effort to clean up the currency in circulation."

With the Bureau of Engraving and Printing unable to print as much money as desired, $1 bills that are expected to last about 18 months have had to remain in circulation for an average of 20 to 22 months. The larger demonimations last longer, with $50 and $100 bills staying in circulation for 10 to 15 years.

Wallace who lives in Annapolis with his wife and four children, says he makes his decision on how much currency to order on the basis of projections from the 12 Federal Reserve District banks and their branches and with the aid of a set of equations that can be used to forecast the demand for currency.

The decision, however, is based purely on an attempt, using these sources, to predict what the public's demand for currency will be in the coming year. It has nothing whatsoever to do with the rate of growth in the money supply, Wallace stresses.

Of course, the money supply, not just currency, is what Reagan was referring to in his speech. Over the years, however, the phrase "printing press money" has come to be a shorthand way of complaining about the rate of growth of the money supply.

Currency is but a part of the money supply, representing less than one-third of even the most narrowly defined measure of money, M-1A, which includes currency in circulation and checking account deposits at other financial institutions, savings accounts and a few other items are included -- the definition of money known as M-2 -- then the currency accounts for only about 15 percent of the total.

Once the currency is printed, it is made available by the Federal Reserve District banks and their branches to the public only through commercial banks that are members of the Federal Reserve system. That means that even other financial institutions, such as savings and loan associations, must get their currency from a local commercial bank. As a result of banking legislation passed earlier this year, however, all financial institutions will soon be free to deal directly with the Federal Reserve banks for currency.

Whenever a commercial bank draws currency from the Fed, whether in new or used bills, the Fed reduces the bank's reserve account by the same amount. Member banks must keep on deposit with the Fed a portion of the amount of money people have deposited in the bank. It is through control of the level of these "reserves" that the Fed controls the growth of the money supply. Therefore, since those accounts go down dollar for dollar as currency is dispensed, Wallace says, the money supply is not affected.

Whatever is happening to the money supply, the supply of currency in people's pockets -- or mattresses -- is rising swiftly. On July 1, for examle, a total of $128.3 billion worth of currency was in circulation, up from $117.9 billion 12 months earlier. Ten years earlier the total was $54.4 billion.

When Wallace decides how much money should be printed, his order, for obscure historical reasons, goes to the comptroller of the currency, whose office regulates national banks and has nothing to do with printing currency. The comptroller forwards the order to an aeronautical engineer named Harry Clements, who, for the last 18 months, has been director of the Bureau of Printing and Engraving.

The latest order called for quantities ranging from 2.081 billion $1 bills to 64 million $50 bills. While there are still $500, $1,000, $5,000 and $10,000 bills in circulation, they are no longer issued and whenever one shows up at a Federal Reserve bank it is retired, Clements says.

Clements, 51, came to the bureau by way of a personnel exchange program in which he "temporarily" swapped his engineering job in private enterprise for a slot at the Occupational Safety and Health Administration. Bitten by the Washington bug, he stayed on, first at OSHA and later as assistant commission of the Department of Health, Education and Welfare's Rehabilitation Services Administration, which deals with vocational rehablitation of handicapped individuals.

Clements had been active earlier in sheltered workshops for the handicapped, an outgrowth of the fact that a daughter, one of six children, has a developmental disability. From HEW he transferred to the bureau, where he was quickly promoted to the top.

Now he is finding his engineering background a help since on of his major tasks at the bureau is purchasing and installing new equipment to meet Wallace's fast growing demand for currency.

Two new presses -- a special type known as "intaglio" because of the unusually high pressure that is put on the paper during printing -- will be installed by year's end, he explains. The bureau has an option for 1981 delivery of two more of the presses, which are made in West Germany and available only through a Swiss firm, Giori.

Somehow managing to stay within the current government hiring freeze, Clements has recently hired a group of journeyman printers, others with printing experience but not on "intaglio" presses, and begun the bureau's first class of apprentices in years.

Clements hopes that the new presses and the new employes will allow the bureau, someday, to get back to a normal three-shift, five-day-a-week operation. Right now the work goes on at least five and a half days, and not long ago volunteers were working as many as seven days.

Meanwhile, he is trying to make some plans that will allow currency printing to continue even if the bureau has to again print gasoline rationing coupons, as it did for four months in 1974. That hiatus is a major reason the dollar bill in your pocket looks so worn today.