The European Central Bank has released two games – Inflation Island and the desperately itled €conomia – to show people how tricky it is to be a central banker.
The first aims to explain how inflation hits the world economy by observing trade on a garish cartoon island; the second puts you in charge of a central bank, armed only with the central banker’s primary tool – the capacity to alter interest rates – to keep the eurozone system afloat as it’s assailed by all manner of nasty shocks.
Although both games have commendable educational value, a cynic could question the timing. Just as the ECB bumbles through the trickiest period of its life so far, here is something to convince potential grumblers that, although they may think they could do a better job, they really couldn’t.
My experience with €conomia didn’t encourage me to try out Inflation Island, let alone pursue a career as a central banker. The goal is to keep inflation just under 2 per cent, applying the occasional nudge of an interest-rate hike or cut to keep things in the sweet spot.
Things start out nicely in my sandbox eurozone, with inflation ticking along just below 2 per cent for a year and a bit. My advisers (the game features a whole boardroom of wacky characters to distract you from its true nature, which is essentially a graph) congratulate me on my light-touch approach. “Good job,” they say.
Soon things start to get out of hand, as an oil crisis precipitates a spike in inflation. Not to worry. I raise interest rates a notch. Not enough, obviously – this is obviously a really nasty oil crisis and inflation is still perilously high next quarter. My advisers all warn me against panicking, but the situation calls for drastic action. Europeans are losing their money out there! I raise the rate a full half-notch.
Next quarter, disaster. The delayed feedback from the first rise hits just as my vulnerable continent is engulfed by a bout of “wintery weather”. The trend line swoops out of view, plunging the eurozone into deflation. By the time it emerges again, it’s practically vertical thanks to all my frantic attempts at corrective action.
If I was a real central banker this would be about the time I’d be sneaking through the back door to avoid the mob outside, stopping off on the way home to buy a wheelbarrow large enough to cart around a large bale of cash.
“Come on, you can do better than that,” chides the irritatingly perky advice bar. “Still, who said it was easy being a central banker?”