Episode 70 – Profiles in Credit – Stephen Poloz
May 27, 2021

Episode 70 – Profiles in Credit – Stephen Poloz

Geoff Castle chats with Stephen Poloz former Governor of the Bank of Canada.

Subtitle: Inflation, recession, monetary policy and spaghetti sauce

In this episode Geoff Castle, Fixed Income Portfolio Manager, chats with Stephen Poloz, former Governor of the Bank of Canada. They discuss Stephen’s formative years, his interest in economics, his tenure as governor and the challenging events he led the Canadian economy through. They also discuss Stephen’s thought process, his views on emerging trends and what he thinks will change in the next decade.

Key Takeaways

[01:55]Stephen talks about his formative years in Oshawa and his side gig as a DJ.
[03:35]Stephen elaborates on his motivation to study economics.
[05:25]The 70’s and Milton Friedman’s recipe for economic stability.
[07:20]Targeting inflation instead of the growth of M1.
[09:00]Stephen talks about his time as Chief Economist at Export Development Canada.
[09:50]The 2008-09 financial crisis, the role of EDC and bailing out General Motors.
[10:00]Using the spaghetti sauce model to explain the aftermath of the 2008-09 financial crisis.
[15:00]Stephen and Geoff discuss Stephen’s risk management approach and what Alan Greenspan said.
[18:30]Geoff and Stephen discuss the 2014-15 oil price collapse and the actions of the Bank of Canada helped avoid a longer recession during this period.
[22:00]The housing crisis and inflation in the economy.
[25:00]Stephen discusses his last six months as Governor and how the recession from the pandemic is different from a normal recession.
[30:30]Geoff and Stephen talk about the Central Bank’s extraordinary policies of 2020 and how it plans to exit from those positions in the future.
[35:20]Has the Canadian economy become too oriented towards residential real estate activity?
[38:15]The biggest risks to stability and growth in the Canadian economy right now.
[40:20]Geoff and Stephen discuss Modern Monetary Theory and Stephanie Kelton’s book, The Deficit Myth.
[43:20]Looking 10 years ahead - will crypto or long bonds that yield 2% still be around?
[44:50]Two book recommendations from Stephen.