What is Monetary Model?

An interactive U.S. Monetary System simulator that allows users to model and stress-test the U.S. monetary system through dynamic 'what-if' economic scenarios.

What is Monetary Model?

Monetary Model is a free, interactive educational simulator of the U.S. monetary system. It lets you explore how American money worked in eight historical regimes, from Alexander Hamilton's 1790 system through the Federal Reserve, Bretton Woods and today. You can then adjust policy levers such as the federal funds rate and money supply and watch a ten-year projection of GDP, inflation, interest rates and the dollar respond.

Is there a free tool to simulate Federal Reserve monetary policy?

Yes. Monetary Model is a free, browser-based simulator where you can raise or lower the federal funds rate, change money supply growth and reserve requirements, adjust government spending and Treasury issuance, and see the effects on inflation, output, unemployment and the dollar. It is built for learning, not forecasting.

Who is Monetary Model for?

Monetary Model is for economics and finance students, teachers who want a classroom demonstration, journalists, and anyone curious about how money works. Every institution has two explanations: a Teaching version at undergraduate level and an Analytical version at graduate or policy-expert level. A toggle switches between them.

Do I need an account to use Monetary Model?

You can read the landing page, pricing and FAQ without an account. A free account is required to enter the Lab, explore the historical era maps, run simulations and save a limited number of scenarios.

What happens when the Federal Reserve raises interest rates?

When the Federal Reserve raises its federal funds rate target, borrowing becomes more expensive throughout the economy. Mortgage, business-loan and credit-card rates tend to rise, so households and firms borrow and spend less. Asset prices often fall, and the dollar usually strengthens because U.S. assets pay more. Over roughly one to two years, slower demand cools hiring and reduces inflation, at the risk of slower growth or recession. In Monetary Model you can raise the rate and watch this chain play out quarter by quarter.

What is the federal funds rate?

The federal funds rate is the interest rate banks charge each other for overnight loans of reserves held at the Federal Reserve. The Federal Open Market Committee (FOMC) sets a target range for it and steers the market rate mainly by setting the interest it pays on reserve balances and through its overnight reverse repo facility. Because other short-term rates follow it, the federal funds rate is the main lever of U.S. monetary policy.

What is a reserve requirement?

A reserve requirement is the share of certain deposits a bank must hold as reserves rather than lend out. It was historically one of the Federal Reserve's policy tools. The Fed cut reserve requirements to zero in March 2020 and now controls rates mainly by paying interest on reserves. Monetary Model keeps reserve requirements as a lever so you can see how they worked in earlier regimes.

How does increasing the money supply affect inflation?

If the money supply grows faster than the economy's capacity to produce goods and services, the extra spending tends to push prices up, which is inflation. The link is loose in the short run: it depends on how quickly money is spent (velocity), on spare capacity, and on what people expect inflation to be. Over long periods, sustained rapid money growth and high inflation go together.

What was the Bretton Woods system?

Bretton Woods was the international monetary system agreed in 1944 at Bretton Woods, New Hampshire. Other currencies were pegged to the U.S. dollar at adjustable rates, and the dollar was convertible into gold for foreign governments at $35 an ounce. The system also created the IMF and the World Bank. It made the dollar the world's anchor currency until the U.S. ended gold convertibility in 1971.

What was the Nixon Shock?

The Nixon Shock was President Richard Nixon's announcement on August 15, 1971 that the United States would stop converting dollars into gold for foreign governments. It also imposed a 90-day wage and price freeze and a 10% surcharge on imports. The move effectively ended the Bretton Woods system, and by 1973 the major currencies had moved to floating exchange rates.

Why was the Federal Reserve created?

The Federal Reserve was created by the Federal Reserve Act of 1913, largely in response to repeated banking panics, especially the Panic of 1907. Under the national banking system the currency could not expand when demand for cash spiked, so panics froze credit. The Fed provided an "elastic currency" and a lender of last resort through twelve regional Reserve Banks overseen by a board in Washington.

What is quantitative easing?

Quantitative easing (QE) is when a central bank buys large amounts of longer-term securities, such as Treasury bonds and mortgage-backed securities, with newly created reserves. It is used when short-term rates are already near zero. The goal is to push down long-term interest rates, support asset prices and ease financial conditions. The Federal Reserve used QE after the 2008 financial crisis and again in 2020.

How does a bank run spread through the financial system?

A bank run starts when depositors fear a bank cannot repay them and rush to withdraw. Because banks hold only a fraction of deposits as cash, even a healthy bank can fail if withdrawals are fast enough. Runs spread through contagion: depositors at similar banks panic, banks sell assets at fire-sale prices, and lending between banks dries up. Deposit insurance and a lender of last resort exist to break this cycle. Monetary Model's Pro crisis simulations model this contagion.

How does the Monetary Model simulation engine work?

Most of the dynamics come from a deterministic, stock-flow-consistent open-economy core. This means every financial flow is recorded on some sector's balance sheet, so money is never created or lost by accident. Rule-based contagion between sectors and historical regime parameter sets are layered on top. Pro adds a Monte Carlo layer that reruns the model hundreds of times with varied parameters to produce uncertainty bands.

Are Monetary Model's results predictions?

No. Monetary Model's results show how economic mechanisms behave under stated assumptions; they are not forecasts. The percentile bands and failure probabilities describe uncertainty inside the model, not the real-world odds of any event. Monetary Model is an educational tool and not financial advice.

Where does Monetary Model's historical content come from?

Monetary Model's historical content is researched against canonical sources, including Federal Reserve and Treasury histories, primary documents and standard academic literature, and is reviewed for factual accuracy. Each era presents both the architects' own views and their contemporary critics. If you spot an error, report it through the Contact page and it will be corrected.

Can I share a Monetary Model scenario?

Yes. Save a scenario, mark it public and copy its link. Anyone with the link can view the results and fork their own copy to modify. Your name and email are not shown on shared scenarios.

What is free and what is included in Monetary Model Pro?

The free plan includes all eight historical regime maps, both Teaching and Analytical explanations, and deterministic monetary, fiscal and de-globalization simulations. Pro costs $9.99 per month and adds crisis simulations, Monte Carlo uncertainty fans and failure probabilities, side-by-side comparison of up to three scenarios, PDF and CSV export, and unlimited saved scenarios.

How do I cancel my Pro subscription?

Go to Settings and choose Cancel Subscription. You will not be charged again, and you keep Pro access until the end of the billing period you already paid for.

Billing periods that have already started are not refunded, because you keep full Pro access until the period ends. Duplicate charges and charges made after a cancellation are refunded. Full details are in the Refunds & Cancellation policy.

Is my payment information safe?

Payments are processed by Stripe, a PCI-compliant payment provider. Monetary Model never sees or stores your full card number.

What data does Monetary Model collect?

Monetary Model collects your account details, the scenarios you save, your billing status if you subscribe, and basic technical logs. It does not sell data or show advertising. Details are in the Privacy Policy.

How do I contact Monetary Model support?

Use the Contact page or email monetarymodel@oandpadvisoryservices.com. We aim to reply within two business days.

Frequently Asked Questions

About Monetary Model

Monetary Policy Explained

How the Simulator Works

Plans & Billing

Privacy & Support

Frequently Asked Questions

About Monetary Model

What is Monetary Model?

Is there a free tool to simulate Federal Reserve monetary policy?

Who is Monetary Model for?

Do I need an account to use Monetary Model?

Monetary Policy Explained

What happens when the Federal Reserve raises interest rates?

What is the federal funds rate?

What is a reserve requirement?

How does increasing the money supply affect inflation?

What was the Bretton Woods system?

What was the Nixon Shock?

Why was the Federal Reserve created?

What is quantitative easing?

How does a bank run spread through the financial system?

How the Simulator Works

How does the Monetary Model simulation engine work?

Are Monetary Model's results predictions?

Where does Monetary Model's historical content come from?

Can I share a Monetary Model scenario?

Plans & Billing

What is free and what is included in Monetary Model Pro?

How do I cancel my Pro subscription?

Can I get a refund?

Is my payment information safe?

Privacy & Support

What data does Monetary Model collect?

How do I contact Monetary Model support?