FIN 310 • Federal Reserve Independence Game

Trump vs. Warsh

Who Controls the Money?

You are the crisis-policy referee. Separate presidential goals, Treasury debt management, and Federal Reserve monetary policy while markets react to war, inflation, rate pressure, buybacks, and a global Treasury selloff.

Classroom simulation: the starting institutions and August 2026 market data are real. All dialogue and crisis events in the game are hypothetical and dramatized.
🏛️

President Trump

Focus: growth, borrowing costs, elections, trade, war, and the federal budget.

VS
🏦

Fed Chair Kevin Warsh

Focus: inflation, employment, financial stability, and Fed credibility.

Starting dashboard • August 24, 2026

3.7%PCE inflation
4.1%Unemployment
3.50–3.75%Fed target
4.70%10-year yield
70Market liquidity
80Fed independence

Who has the legal policy lever?

President + Congress

  • Taxes and spending
  • Trade, sanctions, and war policy
  • Nominate Fed governors and Chair
  • May criticize, but cannot cast an FOMC vote

U.S. Treasury

  • Issue and manage federal debt
  • Choose auction structure and maturities
  • Conduct liquidity-support and cash-management buybacks
  • Buybacks are financed debt management—not QE

Federal Reserve / FOMC

  • Set the federal funds target range
  • Run open-market operations
  • Choose QE or QT
  • Provide emergency liquidity under legal authority

Instructor notes and primary sources

Key distinction Treasury buybacks exchange cash for outstanding Treasury securities to support liquidity or manage cash. Fed QE creates reserves and expands the Fed's balance sheet to ease monetary conditions. Similar asset; different institution, funding mechanism, purpose, and macroeconomic signal.

The game simplifies complex policy transmission. Numerical effects are illustrative, not forecasts.