Federal Reserve builds Lego town to explain inflation

Catarina Saraiva
Bloomberg

Inflation has caught America’s attention and the Federal Reserve is reaching for Lego to explain why some price rises will probably prove temporary.

As policy makers strive to communicate their approach to keeping inflation in check – a vital step to preserve their credibility with the American public amid a recent surge in prices – the Cleveland Fed is taking a different approach.

A still image from an animated video released by the Federal Reserve Bank of Cleveland.

In a series of three 60-second animated videos, it explains what inflation is, why people should care about it and how the Fed controls it, each using a town and characters built out of the Danish toymaker’s colorful plastic bricks.

The Cleveland Fed, home to the Center for Inflation Research, differentiates between inflation across a wide variety of categories and price increases restricted to just a few areas of the economy.

Lego people scream as a narrator describes hyperinflation, where prices increase at uncontrollable levels, before they’re reassured that the Fed’s got things under control.

The final moments leave watchers with a sense of peace, showing how the Fed can keep inflation on track using its various policy tools.

“With the help of the Federal Reserve, there’s just the right amount of inflation,” the narrator explains.