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Show HN: A central bank simulator game with a realistic economic model

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Re: Show HN: A central bank simulator game with a realistic economic model

#181

Post by yreg »

_njyk wrote: post #39
the_third_wave wrote: post #21

*** GAME END *** Your economy produced: 439918 apples. Deflation is easily combated by raising interest above the next expected deflation level so that saving money becomes more lucrative than spending it. Inflation is combated by lowering interest as soon as it rises above the interest level. I never went below 0.50% interest, never above 5.50%. This is easy, maybe I should apply for the job of central banker.

Well I hope that you are going to apply, because in Europe, the ECB didn't understand it at all (hi from a European country with 20%+ inflation)

ECB has additional constraints. Since they don't want to bankrupt Italy, the lever goes only one way.

Re: Show HN: A central bank simulator game with a realistic economic model

#182

Post by imtringued »

zeusk wrote: post #68
nwah1 wrote: post #52

Earlier quoted context omitted.

Under certain Keynesian views, Fed policy is mostly irrelevant, and only fiscal policy matters. Or actual printing... which low rates and QE are very different from. Another view from the neoclassical school has a similar conclusion dubbed the Policy Ineffectiveness Proposition. But others say Fed policy does matter because in the real world contracts and prices are sticky. https://en.wikipedia.org/wiki/Policy-ineffe…

How is QE or low rates not money printing? Low rates causes higher private lending, borrowing creates money (fractional reserve banking). QE also creates money by Federal Reserve buying Treasury's bonds with printed dollars. Both of these are temporary, but we have had QE and low rates for over a decade now. QE was supposed to be unwound in 2018, but covid pushed it to new peaks.

Whenever people say money printing I don't know what that is supposed to mean. If you mean the government does deficit spending, i.e. spends more than it earns, then yes it indeed does do that, in fact, it even does it to increase inflation but it doesn't change the fact that it is still directly liable for the money it spent via debt, unlike the printing of physical currency.

Money and debt is like matter and anti matter. They both emerge from nothing when separated and disappear into nothing when they come into contact.

Re: Show HN: A central bank simulator game with a realistic economic model

#183

Post by [deleted] »

wsc981 wrote: post #97
jcfrei wrote: post #28

Earlier quoted context omitted.

That would result in an economy with huge deflation: People consuming the bare minimum of apples needed for survival because their gold savings would appreciate each year in value.

Sounds like a great way to reduce CO2 emissions!

[deleted]

Re: Show HN: A central bank simulator game with a realistic economic model

#184

Post by eru »

toolz wrote: post #79
selectodude wrote: post #66

Earlier quoted context omitted.

100 percent real GDP growth over 100 years would be an absolute disaster in todays world.

and wouldn't happen in today's world because technology grows exponentially and with it, wealth.

Eh, a sustained 100% growth per century is exponential..

Re: Show HN: A central bank simulator game with a realistic economic model

#185

Post by eru »

Aunche wrote: post #96
unboxingelf wrote: post #35

Earlier quoted context omitted.

People are still gonna want the new iphone and latest suv. Having a hard money as the reserve currency doesn’t undermine the economy, quite the opposite.

Yes. People will always demand consumer goods. The problem with deflation is that it incentivizes you to hoard money rather than invest in businesses give out loans. During periods of economic growth with a gold-backed currency, we don't actually see much deflation because the money supply expands when banks naturally give out more loans and people invest a greater percentage of their wealth into equity. The problem…

It's not actually deflation that's the problem. If productivity grows fast enough, prices can fall, no problem. That's what happened to the computer industry just fine for decades.

The real problem is a fall in nominal GDP. And that's a problem no matter whether prices are rising or falling.

Re: Show HN: A central bank simulator game with a realistic economic model

#186

Post by imtringued »

fartcannon wrote: post #109
OJFord wrote: post #61

Earlier quoted context omitted.

Similarly I immediately lowered to -0.25% and left it there, really quite stable and climbed gradually (not monotically, but close) to 442370. I assume it needs a bit of a tweak for negative inflations, or is limited by the events being fixed - 'people spend 12% less' is more likely to happen at higher interest rates for example. And in particular if we weren't leaving it fixed but had only just lowered it, (i.e. inc…

Isn't a negative interest rate basically UBI?

If cash is abolished or has to pay a negative interest rate then no, you will quickly notice that the negative interest rate is closer to a storage fee and you actually have to store that value somehow in the real economy. The purpose of credit is to bridge supply and demand across time and that actually takes some effort if there are no safe havens like cash or real estate.

Re: Show HN: A central bank simulator game with a realistic economic model

#187

Post by eru »

quixoticelixer- wrote: post #132
toolz wrote: post #81

Earlier quoted context omitted.

Historically 90% of families will lose their wealth within 3 generations. How does that jive with "people will save too much" when it seems rather intuitive monetary policy has nothing to do with how a grandkid who has never worked a day in their life, spends money?

Because saving money is not consuming which is bad for the economy.

Saving money is equivalent to investing. Investing is pretty good for the economy.

Re: Show HN: A central bank simulator game with a realistic economic model

#188

Post by imtringued »

mmastrac wrote: post #11

This game needs a "gold standard" mode to see what happens to the toy economy with no central bank! EDIT: It would also be nice if the game paused around major events to give you more time to think & adjust. I found that the economy went off the rails if you don't react right away.

I'm pretty sure it would behave as if you perpetually set the interest rate 1-3% too high.

Re: Show HN: A central bank simulator game with a realistic economic model

#189

Post by eru »

user3939382 wrote: post #101
mmastrac wrote: post #11

This game needs a "gold standard" mode to see what happens to the toy economy with no central bank! EDIT: It would also be nice if the game paused around major events to give you more time to think & adjust. I found that the economy went off the rails if you don't react right away.

My limited understanding, is (feel free to correct me): The problem with gold is that it's finite. It might be stable, but it's stable for a very small amount of money. The existing system allows us to create a huge supply of money that is used to drive the creation of these monster companies that end up doing things like inventing new microchip fabrication processes and iPhones. If you suck up all the money supply t…

A finite amount of gold is perfectly fine. Fractional reserve banking is a thing, and allows us to create arbitrary amounts of money, even in a gold standard setting.

This has worked really well in the past in eg Scotland and Canada.

Also, the price level can adjust.

Re: Show HN: A central bank simulator game with a realistic economic model

#190

Post by imtringued »

eru wrote: post #180
jcfrei wrote: post #28

Earlier quoted context omitted.

That would result in an economy with huge deflation: People consuming the bare minimum of apples needed for survival because their gold savings would appreciate each year in value.

Eh, that did not happen in real life when countries were on a gold standard..

Globalisation kicked in with the end of the gold standard. It is appropriate to say that it held the economy back massively.
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