Stephen Poloz never met a metaphor he didn't like -

Stephen Poloz never met a metaphor he didn’t like

The Bank of Canada governor has compared the Canadian economy to everything from dog leashes to hockey cards.


Bank of Canada Governor Stephen Poloz is a man whose words can move markets. Many of those words seem to come in the form of metaphors and similes. We’re not talking about the tired old analogies popular among economists, the “headwinds” and “soft landings.”  In his attempts to demystify the arcane world of central bank policy, Poloz has likened the Canadian economy to everything from spaghetti sauce to dog leashes to hockey cards—not to mention his deep love of nautical-themed messages.

Here are his most inventive metaphors since he took office last June:

On what it means to “taper” monetary stimulus:

I sometimes use a spaghetti-sauce model to help explain this. When the bubble burst in 2008, we were left with a crater, which is where we now find ourselves. If you look carefully at a pot of simmering spaghetti sauce, under every bubble, there is a crater that’s equal in size. So, a seven-year bubble, a seven-year crater. Central banks have been filling that crater with liquidity, so we can row our boats across it. We need to make sure we’re getting to shore and not just hitting a rock. But when we get to the other side, when we get home and can climb out of the crater, central banks can gradually reduce the rate at which they add liquidity.

On why high oil prices have been good for the Canadian economy:

You’ve got a box of old hockey cards in the basement, right? Everybody does. What if, in that box, you’ve got a Chris Kunitz card from his rookie days. Hey, now that the Regina native is an Olympic gold medallist and two-time Stanley Cup winner, that card is suddenly worth a lot—and you have the incentive you need to go dig it out of the basement . . . With the average world price of oil over the past decade more than double that of the previous three decades, Canada’s resources are suddenly worth a lot, and we have the incentive we need to go dig them out of the ground.

On how the Great Recession will change global monetary policy in the long run:

It brings to mind the sailors of another era who were driven far off course by a nasty storm. When things calmed, they found themselves in the southern hemisphere. Suddenly, the navigational chart that they relied on—the night sky—was completely different. We have every reason to believe that, after the experience of the crisis is behind us, central banking will be defined very differently than it was just five years ago.

On why exchange rates don’t always reflect changes in the economy:

It’s like walking a dog on one of those leashes that stretch out and snap back. You might hope he’ll stick by your side, but, in reality, the dog is always off in all directions. By the end, your respective tracks zigzag all over the place, much like an economist’s chart. But when you leave the park, you’re still together. That’s how the relationship between the terms of trade and the dollar looks: It’s loose, but dependable.

On innovation in the manufacturing sector:

With Canada’s stronger terms of trade, with our healthy business environment, with our ability to innovate, the future of Canada’s manufacturing sector is bright. Just as your favourite maple tree looks different every spring, the sector will evolve, at least on the surface.

On differences in local economies across Canada:

Just as when you travel from one part of Canada to another, the weather can be dramatically different—hot in the Okanagan, bone-chilling cold in the Prairies and moderate in the Maritimes—local economies can cover the gamut from hot to not.

On how central bankers react to changing economic conditions:

Like navigating a ship, we have had to adjust to the currents around us and to bouts of foul weather. Some of the challenges are minor, calling for temporary adjustments in course or speed. Others may involve a major detour. In worst-case scenarios, there are risks of running aground, or even capsizing.

On his communication and management style:

It’s like a duck on a calm lake. On the surface, he looks like he is idle, but, under the water, his feet are really busy.


Stephen Poloz never met a metaphor he didn’t like

  1. I am not sure that Poloz would want these folksy words to be his sole legacy. In any case, in the case of the monetary stimulus, Poloz should have noted that when one gets to the other side of the crater , one needs to remove the extra stimulus and not just reduce the rate at which one is adding liquidity. In the case of the exchange rate comment, the dog running in all directions seems untrained and confused. My view is that these kind of words may create confusion ! In any case, we wish him good luck as a lot rides on it.

  2. I am so strongly opposed to using loose folksy language on exchange rate monetary or any serious issues (call me uppity, a snob, tight -a…d, or whatever you like ) that I have to write a second comment on Poloz’s so called love of metaphors (a nice way of saying loose talk)! He compares the exchange rate to a dog . Ok but what kind of a dog ? A smart one or a dumb one ? A lazy one or an energetic one ? These characteristics will influence their or exchange rate behavior . More importantly a trained or an untrained dog ? What about the dog trainers or Central Banks who use policy tools ? What role do they play ? I could go on and on . My bottom line is that less talk and more action may be what is needed…action that is measured, clear, firm and consistent.