spend the rest of my time discussing a few of the things that make life interesting for those trying to communicate clearly and effectively about monetary policy. more specifically, i am going to touch on three factors that strike me as particularly relevant for our efforts in this area : the fact that the market is not a single person, the fact that the committee is not a single person either, and the delicate interplay between the committee and the market. the market is not a single person this point was very nicely made by hyun shin in his remarks at the federal reserve bank of kansas city ’ s symposium at jackson hole last summer. shin wrote : the “ market ” is not a person. market prices are outcomes of the interaction of many actors, and not the beliefs of any one actor.... but most discussions of see marvin goodfriend ( 1986 ), “ monetary mystique : secrecy and central banking, ” journal of monetary economics, vol. 17 ( january ), pp. 63 – 92. bis central bankers ’ speeches central bank forward guidance treat the market as if it were an individual that you can sit down and reason with.... by doing so, i believe we are in danger of committing a category mistake where we anthropomorphize the “ market ” as a rational individual with beliefs. 2 let me give you a particular example that illustrates the wisdom of shin ’ s observation. in early may 2013, long - term treasury yields were in the neighborhood of 1. 60 percent. two months later, shortly after our june 2013 fomc meeting, they were around 2. 70 percent. clearly, a significant chunk of the move came in response to comments made during this interval by chairman bernanke about the future of our asset purchase program. for example, in his june 19 press conference, he said : if the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year. and if the subsequent data remain broadly aligned with our current expectations for the economy, we would continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around midyear. 3 perhaps it is not surprising that news about the future course of the asset purchase program would have a strong effect on markets. but here is the striking fact : according to the survey of primary dealers conducted by the new york fed, there was hardly any change over this

global pattern of savings and consumption. domestic savings in the united states could rise - both government and household savings rates can be expected to head up. and foreign consumption could increase, as economies and markets continue to expand. it is worth noting that in north america, household consumption is running well over 60 per cent of gdp. as we look ahead, and take into account the aging population, it is important that savings rates increase in north america. at the same time, household consumption in emerging asia is only about 40 per cent of that region ’ s gdp. as asian incomes rise, there is great potential for household consumption in that region to increase. so these are natural forces that will be working towards the adjustment of these imbalances. the second channel for adjustment will undoubtedly involve changes in real exchange rates ; that is, the relative value of currencies taking into account the effects of inflation. changes in real exchange rates could come about either through movements in relative inflation rates, or movements in nominal exchange rates, or some combination of the two. with respect to nominal exchange rates, the big issue is the need for some effective depreciation of the u. s. dollar against the currencies of emerging asia. a key element here is china ’ s fixed exchange rate, and how successful the chinese authorities will be in meeting their stated goal of moving to a floating currency. in all likelihood, both of these channels of adjustment will play some part in facilitating the correction of global imbalances. as these adjustments take place, two things will be critical to ensuring that real incomes continue to rise worldwide. first, global trade flows must continue unimpeded. that is why we must push for continued progress at the doha round of trade negotiations under the world trade organization. it is also why we must fight against any outbreak of protectionism. second, all economies must take steps to enhance their flexibility so that the adjustment doesn ’ t have to take place through loss of real incomes. here in canada, we have to continue to increase the flexibility of our markets for goods and services, for capital, and crucially, for labour. at the same time, all of us leaders of corporations and public sector institutions must work to enhance the productivity of our workplaces. that leads me to the issues that we have to consider here in ontario. the remainder of my remarks today will deal with these issues. adjustments in ontario now, as i mentioned, i was not able to participate in your earlier discussions about