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CentralForge

One lever. A lag you can’t see. A tradeoff you can’t escape. Try running the economy — and feel why it’s hard.

🔮 Open the central-bank console →

Why one rate is so hard to set

A central bank has essentially one dial — the policy interest rate — and two goals it cares about: steady inflation and low unemployment. Raising the rate above its neutral level cools spending, which raises unemployment and, eventually, pulls inflation down. But "eventually" is the whole problem: the effect works through the economy with a lag of a year or two. So a hike barely moves inflation at first, which tempts you to keep tightening — until the earlier hikes all land at once and you have over-tightened into a recession. And when a supply shock raises inflation and unemployment together, the one lever can only trade one for the other. CentralForge lets you set the rate and run the years, with a simple, exact model — so you can feel the lag instead of just reading about it.

  1. The neutral rate. At neutral, with no gaps, nothing moves — doing nothing is the policy.
  2. The lag. A hike raises unemployment now, but only cools inflation a year or two later.
  3. Over-tightening. Wait for inflation to visibly fall and you’ve already overdone it.
  4. The shock. When both problems rise at once, the rate can only trade one for the other.

Everything runs on your device with exact arithmetic — no library, no network.

The pieces of the model

  • The policy rate — your one lever; above neutral it cools the economy, below neutral it heats it.
  • The lag — the delay before a rate change reaches inflation; unemployment moves first, inflation follows.
  • The Phillips curve — slack (high unemployment) pulls inflation down; a tight labour market pushes it up.
  • The supply shock — raises inflation and unemployment at once, leaving no clean move (stagflation).
  • The Taylor rule — a rule of thumb: raise the rate by MORE than inflation has risen above target — 1½ points for each point — so the real rate climbs too.

A console for ages 15–18 — no cast art here by design.

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