"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 16 mins OPEC ‘Supergroup’ Keeps Oil Exports Subdued
  • 2 hours One Belt, One Road, One Direction for Precious Metals
  • 3 hours Vicious Trio Keeps Bitcoin in Chokehold
  • 5 hours How Infrastructure Is Driving A Commodity Boom
  • 7 hours What’s Really Happening With Venezuela’s “El Petro?”
  • 9 hours Gold Bull and Bear Markets
  • 1 day 5 Big Drivers of Higher Inflation Rates Ahead
  • 1 day U.S. And China To Face Off Over Aramco IPO
  • 1 day Gold Bulls, Brace Yourselves – Fed Hikes Are Coming!
  • 1 day Stocks Fail to Hold Gains, But Still No Correction
  • 1 day Cryptojacking: A New Threat Vector To Critical Infrastructure
  • 2 days Why The Next Oil Boom Will Be Fueled By Blockchain
  • 2 days 5 Things Investors Should Know About China this New Year
  • 2 days Is The South Korean Crypto-Drama Finally Over?
  • 2 days Miners’ Rally? What Rally? Watch Out for More Fake Moves!
  • 2 days Four Percent 10-year Note Yield Will Be a Floor Not a Ceiling
  • 2 days The End Is Near
  • 3 days 5 Record Breaking Gemstones Even Billionaires Can’t Buy
  • 3 days Irredeemable Currency De-tooths Savers
  • 3 days CFTC Offers Bounty For Crypto Pump And Dump Whistleblowers
Why The Next Oil Boom Will Be Fueled By Blockchain

Why The Next Oil Boom Will Be Fueled By Blockchain

As blockchain tech works its…

Permanent Market Support Operations

Permanent Market Support Operations

The greatest flaw in central…

Stephen Johnston

Stephen Johnston

Stephen has over 15 years experience as a fund manger - working for organizations such as the European Bank for Reconstruction and Development, Societe Generale…

More Info

A Little Fun for a Change - Try the Fed's Own Inflation Model

Confused about what the US Federal Reserve hopes to achieve with QE3? Now you can find out. Stand in for Chairman Ben Bernanke and play the new and exciting game that can be found on the San Francisco Federal Reserve Bank's website "So You Want to be in charge of monetary policy".

Fed Game

Try pegging interest rates at 0.0% to 0.25% for 4 years (which is effectively what the Fed is in the process of doing). Tellingly, the game is only able to graph inflation rates up to 15% but using this approach I promise the numbers will be much higher.

My best score was a 36.87% annual inflation rate pegging the Federal Funds Rate to 0.25% for 48 months. Conveniently for the Fed's model, unemployment always fell to 1.5% in this high inflation world. In countless attempts the Fed's model never produced a stagflationary environment of high unemployment and high inflation. They seem unable to conceive of a world where the inflation they seek to create doesn't improve employment rates (i.e. doesn't stimulate the real economy). I think this may prove to be a bit of a blind-spot in central bank thinking.

 

Back to homepage

Leave a comment

Leave a comment




Don't Miss A Single Story