. . . in an extremely ironic twist, it is none other than the San Francisco Fed, which operates the “Be Fed chairman for a day” simulation, where you try to keep both unemployment and inflation within the “price stabeeleetee” barriers, that reveals the reality of ZIRP. The laughter really begins when one recreates precisely what the Fed is doing: namely the policy of Zero Interest Rates, now well in its third year, that things take a turn for the surreal. We challenge any reader to play the Fed simulation game, and to do what Bernanke has done: namely lock the Fed Funds rate at the legal minimum: between 0.00% and 0.25%. In our personal experience, we were dismissed as Fed Chairman after annual inflation literally went off the charts and hit 38.36% following 4 years of ZIRP.
from the comments at 0hedge:
As the expression goes, the only way to win is not play!
It took about 6 months with 19% Fed rate with 10% unemployment to bring down 2% inflation to 0%.
looks like once inflation goes out of control you need opposite of ZIRP….DDIRP (Double Digit Interest Rate Policy)
My college Macro Economics book cost $36.95.
My son’s version of same book cost $164.99.
Nah, it’s worth more now that economics is a “proven” science due to the stellar work of da Bernake.
If you cross out FED Chairman and write in “Krugman” instead, then play the game….YOU WIN EVERY TIME!!!!!
No inflation, no unemployment and chocolate pudding with every meal!!
Essentially the whole population has been hypnotized into lending money from themselves. Now if you can hypnotize someone into that, it’s a pretty good achievement.
Here’s the Fed Chairmna game at the SF FED: