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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

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 https://benoitessiambre.com/simcb.html

doubleunplussed 4y ago
Thank you so much! I've similarly been trying to wrap my head around monetary things recently, and as with learning anything in physics (my field), I believe you don't really understand a model unless you can code up a simulator. It's been maddening not being able to find a comprehensive model of how all the bits fit together, and I have many times wondered if the lack of existence of a game like yours meant that no such model actually existed. Happy to be wrong! And of course a game is a brilliant way to build intuition whether you know the equations of the underlying model or not. I haven't played it yet but am greatly looking forward to it, really hoping to answer various gaps in my knowledge. Thanks again!
- vanjajaja1 4y ago
  I've been looking for something similar too, an explanation of the financial system written out in code so that I can try understand it.
  - DennisP 4y ago
    Something I found recently is Steve Keen's Minsky, and his book The New Economics, which uses Minsky to go through a series of simple models of the modern fiat money system. http://www.profstevekeen.com/minsky/ http://www.profstevekeen.com/minsky/
    - theptip 4y ago
      I was going to suggest this tool too as I’m not aware of others like it. Worth the caveat that Keen is a heterodox economist. So if you pull his off-the-shelf models you are not getting the current accepted “mainstream” theory. I don’t think Economics is a field as mature as Physics where you should have extremely strong deference to the orthodoxy based on an incredibly strong prediction record, but it’s worth keeping in mind.
  - WanderPanda 4y ago
    While we are at it: I need this for climate change as well
    - pes23 4y ago
      There's The Climate Game¹ 1: https://ig.ft.com/climate-game/ https://ig.ft.com/climate-game/ 2: https://news.ycombinator.com/item?id=31106819 https://news.ycombinator.com/item?id=31106819
      - evandale 4y ago
        This game was ok until it asked about energy generation and didn't allow you to increase nuclear production.
      - ephbit 4y ago
        This Climate Game by FT .. it feels a bit like promotion for carbon capture tech.
  - TheSpiceIsLife 4y ago
    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?
    - lottin 4y ago
      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 https://en.wikipedia.org/wiki/Homo_economicus
      - TheSpiceIsLife 4y ago
        Thank you for your response, I shall read that Wikipedia entry when I sober up. Australian East Coast Saturday night wooo!
      - thelamest 4y ago
        Economic “rationality” sometimes gets a bad rap, but it’s more defensible than it may appear and provides a well-circumscribed, workable general foundation to expand on. In simple versions: rational preferences (which include indifference) are transitive and complete, and people pursue these goals. That’s all. Symmetric violations wash away in the aggregate, and asymmetric can be included, e.g. as loss aversion. Criticism of “rationality” is often stuck in late 19th to mid 20th century debates that were since generally resolved.
    - deleted 4y ago
      [deleted]
- Nition 4y ago
  This is exactly why MONIAC[0][1] was created in 1949. Not a real computer exactly - it simulates the entire system with water flow. [0] https://en.wikipedia.org/wiki/MONIAC https://en.wikipedia.org/wiki/MONIAC [1] https://www.youtube.com/watch?v=rAZavOcEnLg https://www.youtube.com/watch?v=rAZavOcEnLg
lamename 4y ago
Thank you! I've looked around for macroeconomic simulations before and found very little. Looking forward to learning from this.
xrisk 4y ago
Please remove the strip-ey overlay you have, it makes the text actively harder to read.
xwolfi 4y ago
Can we scam little people with crypto using central bank scapegoating as well ?
- fartcannon 4y ago
  As in, scam people and then scapegoat 'crypto bros' for the current financial crisis that has more to do with printing money than anything else?
  - danielmarkbruce 4y ago
    What financial crises?
    - fartcannon 4y ago
      Denial works too, I guess.
      - lottin 4y ago
        We're not in a financial crisis.
        JumpCrisscross 4y ago
        To add to this, we’re in a bear market and possibly recession. But not a financial crisis. (We’re also not in a currency crisis. The dollar is gaining against pretty much every currency. It’s also gaining against practically every crypto.)
      - danielmarkbruce 4y ago
        The stock market going down and a decent potential of recession doesn't meet the definition of "financial crisis" that is used by people in finance. I guess you can make up your own definition.
  - vintermann 4y ago
haupt 4y ago
Excellent work, thank you.
ACow_Adonis 4y ago
first of all, awesome job. I'm also a big believer in trying to code such models up to try to understand them. But, and it pains me to say it, as someone with a bit of a background in economics, I dunno if realistic is quite the word i would use for your current model. And I don't mean in a "all models are wrong but some are useful" kinda way. I think some of the limitations and simplifications might take away from the value of the model. I'd urge everyone to read the blog post to understand what's going on. you've touched upon a lot of the apparent findings and paradoxes of macro, which is great. to try to be constructive, I guess I would ask a rhetorical question to focus on a central (pun intended) issue: how are interest rates set by the central bank implemented? is it an independent variable that you kinda change, or is it implemented through changes in monetary + credit supply? I'm concerned that this is another one of those macroeconomic paradoxes built into the model that lessens its applicability: the idea that interest rates are a variable that the central bank issues by decree, as opposed to a rate that they target by adjusting other monetary/ policy settings? anyway, good job. I love it when people actually code up and stimulate models :)
kkfx 4y ago
Allow me to suggest a taste of history https://www.heritage-history.com/index.php?c=read&author=carr&book=pawns&story=american https://www.heritage-history.com/index.php?c=read&author=car... or if you want to cut corners just scroll to the bottom of the page. To study central banks you need those history before the model :-)
- eru 4y ago
  You might be better off studying Scottish and Canadian monetary history, instead of the Bank of England. https://www.amazon.com/Good-Money-Birmingham-Beginnings-Coinage/dp/1598130439 https://www.amazon.com/Good-Money-Birmingham-Beginnings-Coin... is also really interesting.
wheelerof4te 4y ago
You are approaching this from the flawed neo-liberal assumption that, to have good economic model, only inflation has to be controlled. The rate of inflation is hardly more important than, for example, tax rate. From the Central Bank viewpoint, how much money is annually generated could be anywhere between 15-350%. The key to a good economy lies in proficiency in other sectors, like industry. The bulk of money is generated through private bank loans, anyway.
denton-scratch 4y ago
Thank you. Many, many years ago I typed a BASIC program listing for a macro-economics simulation from a computer magazine into a computer. As with your game, the only lever was the bank interest rate. The outcome (for me) was always economic catastrophe. I'd love to play an economic sim that also has a taxrate input; I realise that's normally not set by the central bank; but then again, it's often not the central bank that really sets central bank interest rates; it's the government.
- spurgu 4y ago
  > Although an instrument of the US Government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the President or by anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms." I.e. the US central bank doesn't answer to anyone. Source: https://en.wikipedia.org/wiki/Federal_Reserve https://en.wikipedia.org/wiki/Federal_Reserve
espadrine 4y ago
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/html/what-is-the-deposit-facility-rate.en.html 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.

doubleunplussed 4y ago

Thank you so much! I've similarly been trying to wrap my head around monetary things recently, and as with learning anything in physics (my field), I believe you don't really understand a model unless you can code up a simulator. It's been maddening not being able to find a comprehensive model of how all the bits fit together, and I have many times wondered if the lack of existence of a game like yours meant that no such model actually existed. Happy to be wrong! And of course a game is a brilliant way to build intuition whether you know the equations of the underlying model or not. I haven't played it yet but am greatly looking forward to it, really hoping to answer various gaps in my knowledge. Thanks again!

vanjajaja1 4y ago
I've been looking for something similar too, an explanation of the financial system written out in code so that I can try understand it.
- DennisP 4y ago
  Something I found recently is Steve Keen's Minsky, and his book The New Economics, which uses Minsky to go through a series of simple models of the modern fiat money system. http://www.profstevekeen.com/minsky/ http://www.profstevekeen.com/minsky/
  - theptip 4y ago
    I was going to suggest this tool too as I’m not aware of others like it. Worth the caveat that Keen is a heterodox economist. So if you pull his off-the-shelf models you are not getting the current accepted “mainstream” theory. I don’t think Economics is a field as mature as Physics where you should have extremely strong deference to the orthodoxy based on an incredibly strong prediction record, but it’s worth keeping in mind.
- WanderPanda 4y ago
  While we are at it: I need this for climate change as well
  - pes23 4y ago
    There's The Climate Game¹ 1: https://ig.ft.com/climate-game/ https://ig.ft.com/climate-game/ 2: https://news.ycombinator.com/item?id=31106819 https://news.ycombinator.com/item?id=31106819
    - evandale 4y ago
      This game was ok until it asked about energy generation and didn't allow you to increase nuclear production.
    - ephbit 4y ago
      This Climate Game by FT .. it feels a bit like promotion for carbon capture tech.
- TheSpiceIsLife 4y ago
  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?
  - lottin 4y ago
    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 https://en.wikipedia.org/wiki/Homo_economicus
    - TheSpiceIsLife 4y ago
      Thank you for your response, I shall read that Wikipedia entry when I sober up. Australian East Coast Saturday night wooo!
    - thelamest 4y ago
      Economic “rationality” sometimes gets a bad rap, but it’s more defensible than it may appear and provides a well-circumscribed, workable general foundation to expand on. In simple versions: rational preferences (which include indifference) are transitive and complete, and people pursue these goals. That’s all. Symmetric violations wash away in the aggregate, and asymmetric can be included, e.g. as loss aversion. Criticism of “rationality” is often stuck in late 19th to mid 20th century debates that were since generally resolved.
  - deleted 4y ago
    [deleted]
Nition 4y ago
This is exactly why MONIAC[0][1] was created in 1949. Not a real computer exactly - it simulates the entire system with water flow. [0] https://en.wikipedia.org/wiki/MONIAC https://en.wikipedia.org/wiki/MONIAC [1] https://www.youtube.com/watch?v=rAZavOcEnLg https://www.youtube.com/watch?v=rAZavOcEnLg

lamename 4y ago

Thank you! I've looked around for macroeconomic simulations before and found very little. Looking forward to learning from this.

xrisk 4y ago

Please remove the strip-ey overlay you have, it makes the text actively harder to read.

xwolfi 4y ago

Can we scam little people with crypto using central bank scapegoating as well ?

fartcannon 4y ago
As in, scam people and then scapegoat 'crypto bros' for the current financial crisis that has more to do with printing money than anything else?
- danielmarkbruce 4y ago
  What financial crises?
  - fartcannon 4y ago
    Denial works too, I guess.
    - lottin 4y ago
      We're not in a financial crisis.
      - JumpCrisscross 4y ago
        To add to this, we’re in a bear market and possibly recession. But not a financial crisis. (We’re also not in a currency crisis. The dollar is gaining against pretty much every currency. It’s also gaining against practically every crypto.)
    - danielmarkbruce 4y ago
      The stock market going down and a decent potential of recession doesn't meet the definition of "financial crisis" that is used by people in finance. I guess you can make up your own definition.
- vintermann 4y ago

haupt 4y ago

Excellent work, thank you.

ACow_Adonis 4y ago

first of all, awesome job. I'm also a big believer in trying to code such models up to try to understand them. But, and it pains me to say it, as someone with a bit of a background in economics, I dunno if realistic is quite the word i would use for your current model. And I don't mean in a "all models are wrong but some are useful" kinda way. I think some of the limitations and simplifications might take away from the value of the model. I'd urge everyone to read the blog post to understand what's going on. you've touched upon a lot of the apparent findings and paradoxes of macro, which is great. to try to be constructive, I guess I would ask a rhetorical question to focus on a central (pun intended) issue: how are interest rates set by the central bank implemented? is it an independent variable that you kinda change, or is it implemented through changes in monetary + credit supply? I'm concerned that this is another one of those macroeconomic paradoxes built into the model that lessens its applicability: the idea that interest rates are a variable that the central bank issues by decree, as opposed to a rate that they target by adjusting other monetary/ policy settings? anyway, good job. I love it when people actually code up and stimulate models :)

kkfx 4y ago

Allow me to suggest a taste of history https://www.heritage-history.com/index.php?c=read&author=carr&book=pawns&story=american https://www.heritage-history.com/index.php?c=read&author=car... or if you want to cut corners just scroll to the bottom of the page. To study central banks you need those history before the model :-)

eru 4y ago
You might be better off studying Scottish and Canadian monetary history, instead of the Bank of England. https://www.amazon.com/Good-Money-Birmingham-Beginnings-Coinage/dp/1598130439 https://www.amazon.com/Good-Money-Birmingham-Beginnings-Coin... is also really interesting.

wheelerof4te 4y ago

You are approaching this from the flawed neo-liberal assumption that, to have good economic model, only inflation has to be controlled. The rate of inflation is hardly more important than, for example, tax rate. From the Central Bank viewpoint, how much money is annually generated could be anywhere between 15-350%. The key to a good economy lies in proficiency in other sectors, like industry. The bulk of money is generated through private bank loans, anyway.

denton-scratch 4y ago

Thank you. Many, many years ago I typed a BASIC program listing for a macro-economics simulation from a computer magazine into a computer. As with your game, the only lever was the bank interest rate. The outcome (for me) was always economic catastrophe. I'd love to play an economic sim that also has a taxrate input; I realise that's normally not set by the central bank; but then again, it's often not the central bank that really sets central bank interest rates; it's the government.

spurgu 4y ago
> Although an instrument of the US Government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the President or by anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms." I.e. the US central bank doesn't answer to anyone. Source: https://en.wikipedia.org/wiki/Federal_Reserve https://en.wikipedia.org/wiki/Federal_Reserve

espadrine 4y ago

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/html/what-is-the-deposit-facility-rate.en.html 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.