Interest Rate Roulette

In April of this year, a waiter at the Central Bank Conference held last week in Davos, Switzerland photographed central bankers were playing interest rate roulette.

“Basically, I was bringing coffee into a session labeled ‘Innovations in Policy Determination.’ The U.S. Fed was presenting and – well – the innovation was a Roulette Wheel. They were demonstrating how to spin it to determine upcoming target interest rates.”

FED Response

Shortly after Mr. Johnson’s (a pseudonym that Emma Meier insisted on to protect her anonymity) allegations came to light the US Federal Reserve put a public relations emergency plan into action. Only three months later, they responded to a request for comment from F$JNews with an official statement.

“As always, the Federal Reserve works tirelessly to provide forward-looking information that leads to market stability and predictability. Interest Rate Roulette (IRR) is an integral and innovative part of this effort. Each Reserve Bank, whether in San Francisco or Las Vegas, gets to populate a certain number of Roulette outcomes. Then we spin the wheel to determine upcoming target rates and longer-term guidance. We use the verbiage developed by the winning Reserve Bank to justify our decisions.”

Public Feedback

Professor Whanna Betonit, of the Chicago School of Economics, was quick to praise the new Fed decision-making tool. “There is always a risk of personal bias and lobbying clouding decision-making for central banks. The U.S. Fed has developed an innovative mechanism for balancing bias with impartial decision-making.”

On the other hand, certain members of the House and Senate objected strongly. The Bankers Are Dumb (BAD) Caucus issued a statement of their own: “While the Federal Reserve plays Russian Roulette with our economy, real Americans are suffering from their arbitrary decision-making. It is time to end the Fed.”

Next Steps

At last reporting, members of the Federal Reserve were considering the BAD Caucus’ statement, particularly the idea of implementing a ‘Russian’ version of their Roulette system to encourage fresh ideas within their ranks. However, privately, they suggested that Congress try it first.