I had interest rates at 3%, and then suddenly orchards bankrupted and I had deflation of ~90%.
Show HN: A central bank simulator game with a realistic economic model
191–200 of 323 posts
Re: Show HN: A central bank simulator game with a realistic economic model
#192Earlier 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.
I really dislike this Keynesian line of thinking. It helps Governments print away to glory and have no accountability. You'd only save to an extent, because you have to fulfill your hierarchy of needs. Prices ultimately will reflect supply and demand, and your paycheck will too, not necessarily leaving a huge buffer to invest and save in gold. That's similar to how wages today aren't anywhere close to long term subsi…
The problem is that the deflation thinking has lead to two world wars.
The Austrians are famous for committing extreme austerity before world war two.
First hand experience with tough deflation probably caused Hitler to leave Austria and move to Germany where he promised a quick fix through worker programs. His goal to conquer Europe was basically equivalent to trying to rebuild the Roman empire which was dependent on conquering more land to grow its economy.
The gold standard has no history of success, it lead to the rise of feudalism and countless of wars, revolutions and conflicts.
The only logical answer is to stop the articial price controls on the interest rate and let it fall negative when the economy declines.
Re: Show HN: A central bank simulator game with a realistic economic model
#193Earlier quoted context omitted.
But, aren't finical systems a sociological science, rather than a mathematical model? In economies, people, politics, and their dispositions, their sentiments , dominate. How do you model human responses to local, national, regional, and global events. How do you model human cascades ?
Mathematical models are that, models—a simplified version of a particular phenomenon. Economic models are no different, in particular they presuppose, among other things, that economic agents behave rationally [1]. [1] https://en.wikipedia.org/wiki/Homo_economicus
Thank you for your response, I shall read that Wikipedia entry when I sober up.
Australian East Coast Saturday night wooo!
Re: Show HN: A central bank simulator game with a realistic economic model
#194Earlier quoted context omitted.
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.
I think we have to be more precise.
Which times and which economies are you talking about? There were different regimes that are often lumped together as the gold standard.
(Eg the 19th century Canadian monetary arrangement was very different to mid-20th century US arrangements.)
Re: Show HN: A central bank simulator game with a realistic economic model
#195Earlier 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.
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.
How are they supposed to do that when a rich person A who earns more than he spends accumulates ever greater amounts of gold, leaving everyone else who wants to trade and don't care about trading with A stranded.
Think about it this way. Germany keeps saving more euros. Greece and Spain are trading with each other. At some point all the money is in Germany, making it impossible for Spain and Greece to trade with each other even though they would have maintained balanced trade between each other. Greeks can't buy the latest gadgets produced in Spain even if they wanted to.
Re: Show HN: A central bank simulator game with a realistic economic model
#196Earlier quoted context omitted.
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…
I follow your argument but I would argue that incentives to hoard money aren't necessarily bad. I agree with you that hoarding money leads to a reduced money supply, but I don't think this is necessarily a bad thing. For example: the GFC. Central banks bail out bad actors which perpetuates the incentives that caused these actors to make bad decisions in the first place ("bad" meaning not optimal globally, e.g. sellin…
How about instead of enforcing your authoritarian money model which puts all the power in the hands of financial capitalists you instead abandon the idea of caring about the interests of the financial capitalists and just let people trad with each other without requiring permission from authoritarians?
It is really quite strange that one would consider the gold standard a source of liberty. Humans aren't made out of gold. They die at some point, creating an obligation that outlasts a human life is honestly sickening and perhaps worse than slavery.
Re: Show HN: A central bank simulator game with a realistic economic model
#197Earlier quoted context omitted.
> The pre-central bank localized agrarian and early industrial economic model leant itself to boom and bust cycles eg massive instability Glad to see we put those patterns behind us /s
I mean, we haven't had a depression quite as world-shatteringly gigantic at the Great Depression since. Although I guess it isn't obvious if that's because the system we have now is somehow better, or if it is just the case that we've been more prosperous as a baseline since then, and so our various downturns haven't launched people into such a level of destitution.
Or if we've just postponed it all until now
Re: Show HN: A central bank simulator game with a realistic economic model
#198Earlier quoted context omitted.
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.
There is no such relation.
You can save cash which does not result in additional investment. When banks refuse to lend money, saving does not result in additional investment, in fact that is the cause of QE. The government feeling compelled to invest because people in the private economy refused to invest.
Re: Show HN: A central bank simulator game with a realistic economic model
#199Nicely done. I'm looking forward to going through your code and design. It's a great addition to the set of games that help us get our head around these things. Simple models have existed for a while that show the horizontal circuit can be stable. Here's my correction of Steve Keen's initial horizontal circuit from 2010[0] What you'll find is that the unemployment buffer stock that is disciplining inflation, not the…
Do you know of any examples of countries that had a well functioning job guarantee policy?
The Job Guarantee is an optimal buffer stock stabilisation policy that eliminates the dead-loss zone between the wage on the buffer stock and the bottom wage in the private sector. Sub-optimal buffer stocks do the same thing, but you need more people on them which leads to an opportunity loss of output at the peak of a private sector boom.
The most destructive form of buffer stock being straight unemployment with no compensation. Turns out starving people and letting their job skills rot is pretty destabilising. Who knew?
The buffer stock theory doesn't rely upon Job Guarantee. That's just the natural endpoint of trying to minimise the size of the buffer while retaining its stabilisation effectiveness.
But there always has to be a buffer stock somewhere. What form it takes is a political choice.
There are plenty of partial implementations. The UK Universal Credit system requires 35 hours a week looking for work that cannot exist in aggregate in return for a pittance of pay. The pay is too low, the job is punitive rather than constructive and you can't choose to go on it, but it has anchoring properties that a straight unemployment scheme doesn't have. People will tend to want to get off it and into a private job for example. However, without the balancing choice in the opposite direction it favours capital over worker.
Re: Show HN: A central bank simulator game with a realistic economic model
#200Why can't we just quit, leave the quantity of money static and and let the market decide the rates?