Buzzword of the Week: Mondustrial Policy

Some of the buzzwords I’ve highlighted in my blog are made up of familiar words, combined into a new purpose. Others are compound works (like my last buzzword, mancession). Here’s another: 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.

The term was 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.


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