DEFINITION of 'Mondustrial Policy'

A fusion of "monetary policy" and "industrial policy," mondustrial policy describes the Fed's creation of new money during the 2008-2009 financial crisis in order to rescue certain firms, such as Bear Stearns and AIG, and certain markets, such as commercial paper and money-market mutual funds, at the expense of others, by purchasing securities and making loans.

BREAKING DOWN 'Mondustrial Policy'

A term coined by John Taylor, a Stanford economics professor, former Bush administration treasury undersecretary and developer of the Taylor Rule to guide interest-rate policy. The term describes the Fed's management under Ben Bernanke's leadership of the 2008-2009 financial crisis, which Taylor views as excessively interventionist. Taylor was also concerned about the future effects of this policy.

RELATED TERMS
  1. John B. Taylor

    An economics professor and expert on monetary policy. John B. ...
  2. Taylor's Rule

    A guideline for interest rate manipulation. It was introduced ...
  3. Ben Bernanke

    Ben Bernanke was the chairman of the board of governors of the ...
  4. Policy Mix

    A government's combined use of fiscal policy and monetary policy ...
  5. Green Shoots

    A term used to describe signs of economic recovery or positive ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board ...
Related Articles
  1. Insights

    The Taylor Rule Could Put Fed on Autopilot

    Can monetary policy be set via a mathematical formula alone?
  2. Insights

    The Taylor Rule: Calculating Monetary Policy

    The Taylor Rule suggests how the central bank should change interest rates to account for inflation and other economic conditions.
  3. Insights

    The Taylor Rule: An Economic Model For Monetary Policy

    This interest rate forecasting model has helped central banks around the world adjust their rates to balance out inflation.
  4. Insights

    Is the Fed Behind the Curve?

    Have Fed officials sat on their hands for too long?
  5. Insights

    Dissecting The Bear Stearns Hedge Fund Collapse

    Learn how a deadly mix of greed and leverage cost investors millions.
  6. Insights

    Top 6 U.S. Government Financial Bailouts

    U.S. bailouts date all the way back to 1792. Learn how the biggest ones affected the economy.
  7. Insights

    Lord & Taylor Launches In-Store Bridal Shop

    Lord & Taylor is connecting with a bridal consulting business to add a unique experience for shoppers.
  8. Insights

    How Much Influence Does The Fed Have?

    Find out how current financial policies may affect your portfolio's future returns.
  9. Tech

    What AIG Looks Like Now (and How it Got that Way)

    Despite some mammoth mistakes and a gargantuan government bailout, AIG remains a global insurance powerhouse. Here's how it maintains its position.
RELATED FAQS
  1. What's the difference between monetary policy and fiscal policy?

    Fiscal policy is the collective term for the taxing and spending actions of governments. Monetary policy is the management ... Read Answer >>
  2. How can retail investors invest in commercial paper?

    Find out how individual retail investors can purchase short-term commercial paper, but why it rarely makes good investment ... Read Answer >>
Hot Definitions
  1. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  2. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  5. Indirect Tax

    A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An ...
  6. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
Trading Center