Are You Smarter than the Fed?

Chairman Jerome Powell continues to monkey with the Fed’s monetary policy… 

He’s trying to ease the heat of inflation while simultaneously supporting market growth — all in an effort to avoid a pullback in GDP that would signal an official recession.

Are you smarter thant the fed?

So far markets have only wobbled around after each rate hike, adding to the uncertainty already felt across America.

As Bloomberg put it in a headline this week: “Inflation is Forcing the Fed to Defend its Credibility Almost Daily.”

It’s easy to shake your head and sigh.

But to be fair to good ol’ Mr Powell, could any of us do better?

I’d certainly like to think so — but the reality isn’t quite so simple.

If we were actually handed the reins of power, could you or I do a better job of pulling the economy back into balance?

Back when I was in college my economics professor had us try out a “Federal Reserve Simulator” created by the Federal Reserve Bank of San Francisco, one of the nation’s twelve reserve banks.

It was a simple game, with just a few controls to move the interest rate up or down.

But the effects of any one move were enormous.

The first time I gave it a try, it didn’t take long to realize that nudges in either direction took a long time to take effect.

Much longer than you would have thought at first…

Which was the entire point of the game.

Just like a giant cruise ship that has to move the rudder hundreds of feet before it can make a turn, there’s a painfully long lag before any of your market changes take place.

I wanted to show you what it’s like to play this game for yourself… but I can’t. 

I looked up the game this week only to discover the simulator was shut down for good over two years ago.

A statement reads: 

“Thank you for your interest in the monetary policy game, ‘Chair the Fed.’ The game has been a useful and fun tool to learn more about monetary policy. However, the Fed has updated its approach to monetary policy, and the changes are not readily accommodated within the existing structure of the game.”

Or, to put it more bluntly… 

Today’s market conditions are so bonkers, and the Fed’s manipulations so extreme, there’s no longer a point to playing with the tame conditions of the original simulator.

The Federal Reserve has had to give up on its own educational game!

Quantitative easing… wild swings in the value of the US dollar… unprecedented volatility… they’ve completely changed the way the Fed operates.

The tumultuous times we’re living in can’t easily be simulated.

As you can see on this chart, published by the Fed itself, we’re in the middle of a spike of sudden rate hikes that are completely unlike anything the Fed has done in the last 20 years.


Key macroeconomic indicators chart published by the Fed.

Gone are the slow, steady moves of the original game.

After searching around I did find a new version of the simulator.

It’s far more simplified, but does at least offer a feel for what it’s like to play with economic controls in real-time.


Federal reserve simulator.

You can try it for yourself right here:

So how’d you do?

Were you able to pull America back onto the right track?

As this simulation demonstrates, it’s not easy. 

The Fed doesn’t have any simple fixes in its bag of tricks.

But while managing monetary policy is a series of tough calls, there's a valid complaint I’d like to raise at this point: the Fed’s irresponsible lack of transparency.

The Fed hasn’t been honest.

They’ve been flat-out lying to the American people about the true state of the economy.

They keep trying to pretend everything is okay, even when the numbers in the reports on their desks say otherwise.

So while I don’t expect Chairman Powell to wave a magic wand and fix everything… I DO expect to be told the truth.

Americans shouldn’t rest until they get some honest answers about where the economy is heading.


Seth Mandel tweet about the recession.

But in the meantime (and let’s be real: we’re not likely to get reliable answers anytime soon) it’s not too late to protect yourself from the Fed’s bold-faced lies.

And there’s no need to get whiplash as Chairman Powell tries to stomp the brakes and the gas pedal at the same time.

Here at Daily Profit Cycle, we’re making a hard turn away from market-sensitive investments.

(Now is the wrong time to be sticking your hand into that fire — you’re only going to get burned.)

But that doesn’t mean you should give up on building your wealth.

Not in the slightest.

It’s just time to change strategies.

If you follow a tried-and-true blueprint for success, there’s still time to secure your future.

Daily Profit Cycle founder Nick Hodge prospered all throughout the 2008 financial meltdown… and he’s still prospering now.

Regardless of what the Fed does (or doesn’t) do, looking out for yourself is still the best way to be the smartest person in the room.

Because for all of us stuck down here, dealing with whatever the government’s bankers dish out… this is no simulation.

We’re making our move.

John Carl

John Carl
Editor, Daily Profit Cycle