The Autopilot Desk

The Autopilot Desk

The same toy economy, steered by two PID controllers instead of your hands. Tune the gains, trigger a shock, and watch how the loops respond. Drag any chart by its handle to reorder.

Control system

Dual mandate plus a debt brake: one loop per target. Values update live.

Economy jobs · prices housing · credit 6–18 month lags Target inflation 2.0% Σ + − e +0.00 Monetary PID P +0.00 I +0.00 D +0.00 Limit 0–15% rate 4.00% π 2.0% Measured π · 3 mo late Target unemp. 4.5% Σ − + e +0.00 Fiscal PID P +0.00 I +0.00 D +0.00 Limit 0–8% infra 0.0% of GDP, bond-funded Emergency helicopter fires when u > 8.0% heli 0.0% u 4.5% Measured u · 3 mo late Target debt/GDP 100% Σ − + e +0.00 Debt PID P +0.00 I +0.00 D +0.00 Limit 0–6% brake 0.0% cuts infra, then taxes d 96% Measured debt · 3 mo late
What each shock doesMechanism, effects, and why it is hard for the controllers
ShockWhat happens in the modelInflationUnemploymentAlso movesWhy it is hard to control
RecessionBusiness and consumer confidence drops. Demand falls by about 5% of the workforce and fades with a half-life of roughly a year.FallsRisesMortgages, house prices, velocity fallThe easy one. A pure demand shock, so both loops push the same way: cut rates and spend.
Oil shockEnergy costs add 6 points to inflation, fading over about 9 months. Confidence dips slightly.JumpsRises a littleReal wages fall, rates riseA supply shock. Inflation and unemployment rise together, so the monetary loop hikes while the fiscal loop spends. The loops fight.
Housing crashHouse prices drop 20% at once. New mortgages fall by about two thirds for 8 months, and construction demand collapses.FallsRisesMortgages, money supply, velocity fallLower rates help, but only after the 8-month freeze ends. Integral wind-up is a risk.
Bank panic10% of the money supply vanishes as loans are called in. Mortgage lending freezes for 4 months and confidence drops.FallsRisesMoney supply drops, velocity risesMoney can't reach borrowers, so rate cuts transmit weakly at first.
PandemicA 6-month lockdown caps employment at 88% of the workforce and confidence collapses. Unspent income piles up as forced savings. On reopening, supply chains clog (+4 points to inflation) while households spend those savings.Falls, then surgesSpikes to 12%+R&D stops, efficiency freezes, velocity collapses then recoversTwo phases with opposite needs. Rate cuts can't create jobs that are legally shut, so the integral winds up. On reopening, the stimulus meets pent-up demand and inflation overshoots, like 2021–22.
WarThree years of defence spending at 5% of GDP, all borrowed, which hires workers directly. Commodity prices add inflation, lenders charge a 1-point premium, and 3% of productive capacity is destroyed.Rises and stays highFallsDebt and interest bill jump, efficiency drops 3%, mortgage rates riseThe economy runs hot on spending the controllers don't own. The monetary loop must lean against it, and the fiscal loop correctly goes quiet.