Federal Reserve Simulator · published
Hey everyone,This update is a balance and realism pass driven by the last few weeks of player writeups and a fresh historical audit. No new mechanics, just a lot of careful tuning. Here's what to expect.Recoveries feel more responsive
Crisis severity now decays in proportion to how deep the crisis was, so recovery from major recessions tracks the historical record more closely.
Sandbox wage-price spiral threshold raised to 7% inflation / 7% unemployment, giving recession recovery more breathing room.
Booms carry forward
During sustained good conditions in sandbox (growth above 3%, inflation under 5%), unemployment now drifts down quarter by quarter. Sub-4% unemployment can persist when you've earned it.
Tech booms and manufacturing booms now generate a multi-quarter unemployment tail on top of the immediate effect, reflecting how real structural booms play out over years rather than a single quarter.
QE feedback
$100B of QE in sandbox now produces a more visible market and confidence response on the quarter it's deployed. Underlying macro effects on growth and unemployment are unchanged.
Reserve ratio refinements
Post-1994 effectiveness adjusted to better reflect how the tool faded as sweep accounts spread, so older reserve-policy choices don't carry undue weight in modern eras.
GDP, inflation, and unemployment responses to reserve-ratio changes recalibrated against the 1936-37 reserve doubling, a key historical episode where the real outcome was a roughly 10% GDP fall and 5pp unemployment rise.
Volcker era and the 1970s
Inflation response to extreme interest rates (above 12%, 14%, and 16%) refined and gated by current inflation levels, so historical Volcker policy produces the historical Volcker outcome of roughly 3pp/year of disinflation.
The 1973 OPEC oil shock and its aftermath now produce period-specific inflation drift, matching the real CPI climb from 3% to 11% across 1973-74.
Free mode inflation anchor
Inflation mean reversion toward the 2% target strengthened in free mode, with an additional pull at very low inflation levels to keep extended runs from drifting permanently into deflation.
Thanks to everyone posting long sandbox writeups and forum threads. Your reports drove most of these changes. The expectations-augmented Phillips curve question that came up recently is still on the list for a future update.