That's right, it's my idea for a new video game. Here are the basics:
This post is inspired, by the way, by the fact that the Federal Reserve cut its federal funds rate today for the first time in four years, and by a fairly significant amount (1/2%, if anyone is curious, from 5.25% to 4.75%). Also, you don't really have to care about this fact to see the beauty of my video game idea.
So, in the game you get to be Ben Bernanke, and you get to sit at a table all day talking about economics. Sounds great so far, right?
The purpose is, of course, to use countless surveys, studies, statistics, economic indicators, mood rings, temporal vortexes and cheat codes to determine what the optimal funds rate should be. There is always a correct answer, and it's your job to figure it out. If growth and inflation look like they might be too high, raise the rate - but by HOW MUCH?!?! If everybody starts whining because an inevitable recession bothers them, you can lower the rate AND get more respect in the press! However, you always risk pissing off homeowners, stock gurus and bond traders, so the trick is to decide between doing the right thing or doing the popular thing.
So, not only does this game involve the most complicated puzzles ever, but it also adds elements from Guitar Hero, Sim City, Mario Kart and DukeNukem 3D.
I'm thinkin' first-person shooter style. I can picture it now: you're sitting at a big table with piles of paper and graphs in front of you - and Donald Kohn tries to warn you about the recent inflation indications, and you say, "Go to hell, Kohn! Did you forget about the CREDIT CRUNCH?!?" and you start shooting everyone and throwing turtles at them, then you go and give a press conference to a cheering crowd...
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On a related note, Ben Bernanke published his game strategy today, and it looked exactly like this:
(Dow Jones 10-minute-intervals-for-3-days chart)
He beat the game!!
I've never played Guitar Hero, but I'm imagining an equivalent amount of in-game fanfare would look like this:
Now, seeing as how Ben Bernanke made it look so easy, don't you just want to go try your hand at controlling the U.S. economy?
[Warning: Economist Joke Alert]
There can even be a cheat code for this game, called "Futarchy Mode," in which you don't have to do any work, and you can never get blamed for your mistakes - especially years down the line, when you accidentally cause stagflation by worrying too much about temporary recessions caused by the downturn in real estate.
I swear, that joke (and this entire post) would be funny if you were Allan Meltzer.
Tuesday, September 18, 2007
Rate Slasher: Market Vengeance
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9 comments:
So I'm confused - are you for or against the rate cut? Knowing you I would guess you are for it, but there's a hint in the post that you are against it.
Personally I think, as we have discussed a billion times, that there is an eminent recession to come. So why delay the inevitable?
So would the press really weigh in the equation? War? What is the magic equation for this drop in percentage?
Inquiring minds want to know...
Fred: I was trying to be a little vague in the post, in order to put more emphasis on the market's reaction to a rate cut instead of proselytize, but I couldn't help it at the end when referring to Allan Meltzer and stagflation. Now I'm accepting your unintended invitation to start proselytizing!
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To the inquiring minds:
"Why delay the inevitable?"
Exactly - Agreed.
Although I'll admit I know very little compared to the Fed when it comes to forecasting growth, I do have good evidence for whether we are above the "recession line" or below it, if that makes any sense.
From my perspective, it seems like we're above the line right now, and thus due for at least a small recession. In fact, the relative size of the recession might be given by that graph I drew in that old post (Molehill Defense), but then again, that's just one forecasting tool of many.
Lowering the rate, especially by half a point, will do exactly as you say, Fred - delay the inevitable. Not only that, it should, potentially, further fuel the speculative growth we've had in the last couple years. ...Or so I believe...
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I'm guessing you assumed I'd be in favor of a rate cut because of how much I've talked about Ben Bernanke's coolness. However, he just shoved all of my expectations in my face and allowed recession fears to overcome his "inflation fighter" stance, which is exactly why I liked him.
I was leaning toward no rate cut at all, or at most .25; definitely not the .50 that they did. I think it signals Bernanke's willingness to give in to [stock] market pressures, and this signal, on top of low rates, will drive stocks up to the point that we'll end up with a repeat of 2000-2003 stock market drops.
The funny thing is that, this time, my opinions can be proved correct one day - it's not just me making crap up for no reason; if the S&P's price drops over the next two to six months or so, I'll admit that my stance was wrong. If they go up, though, it'll prove me right - ultimately...
Today, with a 335 point gain in the Dow (2.5%), I think the evidence is pointing toward "speculative bubble."
And Fred - the magic equation is mostly in Bernanke's head, and it apparently puts more weight on the "subprime credit crisis" than it does on the recent signs of inflation-causing growth. Common sense would suggest that he'll be right and me wrong, but then again, he has a lot more peer pressure to be reactionary instead of focused on the longer term at the expense of our current economic health.
If I've made any vague statements, by the way, let me know - I'd appreciate the opportunity to defend my position or explain myself a little more clearly.
Holy crapoly, this comment is as long as the post...
I would let Izzy play that game. Get rid of the guns and add more turtles you can throw and possibly a boomerang, or bombs.
Will there be an international version?
Is there a special controller that must be used?
You already answered all of my other questions.
Well, it's a little off the path, but never-the-less, related. In your expert Foreecon opinion, why do you think the fed is choosing to drop now opposed to later?
Is it because there is a fear that if we fall into a recession that our economy would be unable to bounce back? I would hope the fed has more cojones than that...unless Burnanke feels it's to keep a job.
Is it because of the Presidency shift in 2008/2009? I ask this because: This way the economy is not a major hot button election issue, and it would eliminate yet another bad mark on our current President on his way out. In my opinion, it might even be worse to make that decision now because it may put more pressure on the elections.
Any thoughts?
Sorry Zane - I'll leave you with the lighthearted entertaining questions, while I bore the audience.
Biz first:
Fred, I think its almost entirely the weight that the board (fed) put on the subprime "crisis." They're all still afraid of inflation, but even more afraid of how much damage the real estate bust could cause. The Fed often tries too hard to prevent recessions and control the ups and downs accurately, and, in this case I believe, they are trying so hard that they forget that a downturn in needed (inevitable.) There are also about 20 other reasons they did it - but I have faith that none of them are political. (Although Bernanke being new might have something to do with his reactionary stance...)
Izzy Second:
Are you suggesting, Zane, that Mario Kart is less damaging to our children than Doom or Duke Nukem; that shooting turtles is better than shooting guns?
I'm appalled!
On the other hand, Rate Slasher: Market Vengeance (working title) would benefit greatly from more boomerangs - as well as bananas, mushrooms and stars. The stars, I think, would grant you the temporary ability to beat up Jim Cramer for being a whiner. (Another slightly inside joke - search YouTube for "MARKET MELTDOWN" - it's hilarious.)
And the special controller would be a game pad shaped like a Phillips Curve. (again...)
I think at some point we'd have to change the name of the game from Rate Slasher: Market Vengeance to Dr. Bubble or something like that, which would be all right.
Different demographic, same emphasis on raw data and kickin' ass with boomerangs.
Those are my two favorite things, come to think of it...
Fred - You are like a pot roast. Warm and filling. Good protein to keep your insulin level and your energy high.
I am like Pork Fried Rice. A tasty mix of crap that doesn't belong together, but you will end up hungry again in 30 minutes.
I'm not sure what Dave is.
Ice cream, Zane, vanilla.
With hot fudge.
Ha! That's rich! (Laughing out Loud!)
That's what she said.
...Thanks for the set up, bra.
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I think I've changed my mind about this anti-acronym thing. I think we should just invent new ones that more accurately describe how we actually perceive whatever the hell it is we're talking about. What do you think? We just need to define them and make them well known. Here's a start:
SG = Small Giggle
LI = Laughing Inside
HSFTWFFITLMAO = Holy shit fuck, that was fucking funny, I'm totally laughing my ass off
Feel free to adopt or adapt...
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