One other big thing this game is missing is that a big part of what a central bank does is maintain confidence in the system and steer sentiment. Central banks

One other big thing this game is missing is that a big part of what a central bank does is maintain confidence in the system and steer sentiment. Central banks move markets just by talking about what they MIGHT do in the future. They don’t even always need to move interest rates, just talking about maybe moving interest rates can change things. This is similar to strategic reserves. There is a really great planet money story about the rice shortage about a decade ago, which was completely artificial. There was plenty of rice, but a panic lead people to hoard rice which caused an actual shortage. The way they eventually stopped the panic was to announce they were going to sell rice from this huge strategic reserve… and just by announcing that, it caused the price to return to normal. They didn’t have to actually sell anything, just announce it. Markets are not purely rational https://www.npr.org/transcripts/169708534 https://www.npr.org/transcripts/169708534