That one, smart Republican speaks. Yglesias has the goods:
The Fed’s operational independence doesn’t mean this isn’t a subject people should have opinions about (politicians talk about the Supreme Court all the time) and it’s important. But Paul Ryan seems to have some odd views on how this works:
We need to do things to free up credit. We need regulatory forbearance there. Right now, the policymakers and regulators are doing opposite things. So you’re right that there’s a lot of capital parked out there, and we need to coax it out into the markets. I think literally that if we raised the federal funds rate by a point, it would help push money into the economy, as right now, the safest play is to stay with the federal money and federal paper.
Krugman:
I don’t even know where to start with this. What does Ryan think the fed funds rate is? (It’s the rate at which banks lend each other money overnight, usually to help meet reserve requirements.) He obviously doesn’t know the the Fed funds rate basically equals the return on federal paper, so that raising that rate would make banks more, not less, likely to stay with that federal paper. I’m sure someone will try to come up with a reason why Ryan is being smart here, but the truth is that he’s stone-cold ignorant....
So this is the smartest Republican Congress has to offer?
Of course, Ryan’s idea of fiscal reform is to run huge deficits for decades, but claim that it’s all OK because we’ll cut spending 40 years from now; and he throws a hissy fit when people challenge his numbers, or call privatization by its real name.
But hey, he’s intellectually ambitious.
Ryan's the wunderkind of the Republican caucus, House and Senate. Heaven forfend these people get the Congress back.