Mitt to Feds: Don't make borrowing cheaper.

This is outrageous, dangerous and nonsensical.

Mitt Romney, apparently with economist John Taylor's advisement, is urging the Feds to not lower the cost of borrowing.  Instead, he'd rather give businesses direct incentives -- or as I've repeatedly mocked conservatives, they think they can encourage businesses to increase the supply of employed labor by minimally adding incentives (as a percentage of total labor cost) without an increased demand for goods and services.  Never mind that corporate profit margins hit an all-time high, throw more money at businesses and they'll automatically start hiring!  Or maybe -- really I'm going out on an extremely long limb -- they'll just keep that money for themselves, eh?

What's going on with John Taylor?

No one would credibly believe a person espousing the theory that, in response to a recession, the Feds should increase the Fed rate.  Likewise, constricting the money supply at a time when banks are consolidating their lending due to shrinking collateral, only makes the recession worse.  By doing nothing, the Feds would essentially mirror the current actions of the European Central Bank, and we know how well that's going, over in the EU!

And I understand the importance of price stability, but unless Taylor were to come out and tell us that his inflation target was 5%, then I don't know how he expects America to grow, considering we've been sitting at the conventional inflation target rate of 2% for years, now.

But really, I'm confused about Mitt's message.

Is he trying to say that consumers and homeowners shouldn't directly benefit from the same lowered borrowing costs from Fed intervention, and that businesses should be the only recipient of incentives to boost spending?  On Friday he said that the unemployment rate increase was a "hammer blow to the middle class", but rather than give the middle-class additional tax cuts -- remember his 5-point plan doesn't include tax cuts for the middle-class -- or simply throw money at the middle class, Mitt's solution is purely trickle-down economics, by giving rich people and businesses tax cuts.  So if Mitt is to be trusted, if you hand money to middle-income people, they'll save it, but if you give it to those who have saved up so much money that, in order to reduce risk they've offshored and spread it about in various asset classes, naturally these people will....spend it?

Worse, Mitt is attempting to influence the independence of the Feds, by injecting his politics.

Let me put it this way: If the Feds can wield interest rates or other actions at the whim of a political actor, then we could have a situation where the Feds choose their President and Congress by means of manipulating the value of the dollar, at the expense of the economy and employment.  A totalitarian plutocracy, is not something to strive for, but maybe it is something that Mitt Romney and other conservatives do.

Now I don't for one second believe anyone in the Federal Reserve will bother to pay attention to Mitt's pleas, but I am concerned that it will embolden conservative politicians and pundits to push for a rewrite of the law that would end the Feds' independence.

Argentina, here we come!