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

benoitessiambre.com

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

#271

Post by espadrine »

BenoitEssiambre wrote: post #2

I made this game in order to try to wrap my head around central banks, inflation and macroeconomics, in order to get a better understanding of the aftermath of the global financial crisis and the current period of high inflation. Here is a blog post that goes into further details: https://benoitessiambre.com/simcb.html

It is cool to make those simulations. The mechanics explained deviate significantly from any central bank I know.

In particular, the negative interest rate of SimCB does something very different from, almost the opposite of, what the ECB does (along with many other central banks). What they have is a negative interest rate on the deposit facility rate, which means that overnight deposits on a class of central bank accounts will incur a loss for the commercial bank of, say 0.5% yearly, which incentivizes instead investing those funds.

cf. https://www.ecb.europa.eu/ecb/educational/explainers/tell-me...

In SimCB, a negative interest rate makes everyone incentivized to take on a loan, as they will get free money at the expense of everyone else as long as they reimburse the principal, which is even easier when they don’t invest the money in orchards.

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

#272

Post by notahacker »

moomin wrote: post #6
SubiculumCode wrote: post #5

Cool stuff. It would be interesting to have a simulation with three levers: interest rate, taxes, fiscal spending. But in the end, the problems with most such models is that the outcome ends up being determined by the assumptions built into the model.

Well, indeed, that was a huge problem with Sim City. They believed cities should have low tax rates, so of course low tax rates are the correct strategy. They also discovered exactly how much space building parking takes up so… they made cars take up no space rather than have a game in which public transport and cycling was the go-to approach.

The weird bit about SimCity wasn't so much the low tax rates, as the system encouraging you to set higher tax rates on the poor than the rich as the main way to ensure a city full of shiny villas rather than crumbly shacks. That's... actually not how wealth is created.

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

#273

Post by mtoddsmith »

reilly3000 wrote: post #137

After a rather dismal first couple of runs I read the blog post for some hints. The best I found was to try to raise rates during the good times so there is wiggle room during downturns. I was able to get 443,904 by raising to over 10% during the initial prosperity period and was able to cut rates in half as soon as there was a crash. Ultimately I stabilized at around 3.5%. As of the time of this post I think that is…

If interest rates are high then the typical borrower can no longer compete with the cash buyers buying up all the real estate. How does that play out?

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

#274

Post by roflyear »

adam_arthur wrote: post #118
nwah1 wrote: post #102

Earlier quoted context omitted.

https://www.pragcap.com/bernanke-explains-why-qe2-is-not-mon...

Suppressing rates via QE multiplies the spending power of a dollar, which has a very similar effect as creating more currency

Wrong! In reality low rates does not mean more people are qualified for loans. So what happens is more people don't get loans. Or at least many more. Now if you change laws to make it attractive for people with higher risk to get loans. Or give them loans from the government. Etc... That's different.

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

#276

Post by cheriot »

mtoddsmith wrote: post #273
reilly3000 wrote: post #137

After a rather dismal first couple of runs I read the blog post for some hints. The best I found was to try to raise rates during the good times so there is wiggle room during downturns. I was able to get 443,904 by raising to over 10% during the initial prosperity period and was able to cut rates in half as soon as there was a crash. Ultimately I stabilized at around 3.5%. As of the time of this post I think that is…

If interest rates are high then the typical borrower can no longer compete with the cash buyers buying up all the real estate. How does that play out?

It's a housing supply problem. Interest rates were just a bandaid.

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

#278

Post by adam_arthur »

roflyear wrote: post #274
adam_arthur wrote: post #118

Earlier quoted context omitted.

Suppressing rates via QE multiplies the spending power of a dollar, which has a very similar effect as creating more currency

Wrong! In reality low rates does not mean more people are qualified for loans. So what happens is more people don't get loans. Or at least many more. Now if you change laws to make it attractive for people with higher risk to get loans. Or give them loans from the government. Etc... That's different.

More people are qualified. Refinance a mortgage from 10% to 2%, and what does that do to your cash flow and ability to borrow more?

Businesses carry a lot of debt too, and can refinance lower and borrow more. Compare private sector debt levels today vs the 80s

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

#279

Post by nly »

eru wrote: post #187
quixoticelixer- wrote: post #132

Earlier 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.

Most "investing" isn't investing either. When you buy Facebook shares on the NYSE not a penny is going to Facebook, you're just transferring shares from one person to another at a new price
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