On this blog, our views on Canadian economic leadership have always been mixed. While opinions about Conservative leader Pierre Poilievre vary, our positions on former Bank of Canada Governor Stephen Poloz and current Governor Tiff Macklem are clearer. To understand why, one must first appreciate the unique nature of Canada’s central bank.
Unlike the U.S. Federal Reserve, which at least in theory is treated as an independent institution, the Bank of Canada is a federal Crown corporation. Its mandate, as interpreted through Canadian law, is not independence for independence’s sake but rather to assist the federal government in achieving its agenda. In practice, that agenda can easily be shaped for good—or for ill.
From Carney to Poloz: The Turn Toward Reckless Policy
Mark Carney served as Governor of the Bank of Canada until June 2013. While not perfect, Carney resisted pressure to recklessly slash interest rates and largely pursued a policy of caution. His “do nothing” approach frustrated some politicians but helped Canada avoid unnecessary distortions.
When Carney departed to lead the Bank of England, Prime Minister Stephen Harper appointed Stephen Poloz. That decision, in our view, marked a turning point in Canada’s economic trajectory.
Poloz lowered interest rates at a time when Canada’s economy was growing, housing markets were healthy, and there had been no historic housing collapse like in the United States. Rather than normalize rates, Poloz pursued cheap money, which ultimately set the stage for fiscal excess. Within two years of his appointment, Harper’s political support collapsed, and Justin Trudeau won the 2015 election on a platform of deficit spending—enabled, in no small part, by Poloz’s rate policies.
Tiff Macklem: A Difficult but Coherent Approach
Fast forward to 2020. Tiff Macklem took over as Governor during an extraordinarily difficult period marked by global uncertainty. While Macklem has his critics—and Pierre Poilievre was quick to target him as a convenient political adversary—he did something Poloz did not: raise interest rates when data demanded it.
Macklem’s willingness to tighten policy, even in turbulent times, distinguishes him. Listening to Macklem, one hears a coherent framework for monetary policy, even if one does not agree with every statement. As a Christian, I see value in coherence and accountability—even if imperfect—over reckless expedience.
Pierre Poilievre’s Dilemma: Growth Without Austerity
Looking forward, the concern is not Macklem but the likely economic environment under a future Pierre Poilievre government. Poilievre has positioned himself as a centrist manager who seeks to make Canada more attractive to big industry. While this may draw investment, it does not address deeper structural problems:
- Persistent price controls: Rent controls and minimum wage laws remain firmly in place at both provincial and federal levels.
- Transfer payments: Poilievre has offered no indication that he would overhaul the costly system of federal transfer payments.
- Regulatory barriers: Canada’s internal regulations continue to act as silent but significant drags on production and competitiveness.
Without austerity measures or significant regulatory reform, the only practical tool left is monetary debasement—weakening the Canadian dollar to stimulate growth. This approach might temporarily improve competitiveness but will erode purchasing power for ordinary Canadians.
The Coming Debasement of the Canadian Dollar
Canada faces a financial education problem. Policymakers and the public alike often fail to grasp the long-term consequences of low interest rate policies, deficit financing, and regulatory stagnation.
Tiff Macklem has acknowledged the need for fewer domestic regulations—something absent from the agendas of his predecessors. Yet even he is constrained by political realities. With debasement of the Canadian dollar effectively baked into the system, Macklem’s decisions are less about preventing the storm and more about managing its impact.
The danger is that Canada will continue to bully its largest trading partner, the United States, while remaining overconfident in its own policies. But history shows that when the U.S. responds with equal force, Canada’s overreliance on its southern neighbor is laid bare.
Conclusion
While Stephen Poloz enabled an era of cheap money that distorted Canada’s economic trajectory, Tiff Macklem has at least attempted to bring coherence and necessary, if unpopular, rate increases. For that reason, we continue to view Macklem more favorably.
But the larger picture remains grim. Without regulatory reform, without genuine austerity, and with political leaders unwilling to confront Canada’s entitlement culture, debasement of the Canadian dollar is not a possibility—it is an inevitability.
As Christians, we are reminded in Psalm 34: “Evil shall slay the wicked.” Canada’s mistreatment of its productive sectors will have consequences. The only true solution for individuals is not found in politics or monetary policy but in repentance and faith.
Consider making Jesus Christ your Lord and Savior today.
