Does Neo-Fisherian Economics Cause Fed to Bark Up the Wrong Tree?

This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/economics--politics-education/does-neo-fisherian-economics-cause-fed-to-bark-up-the-wrong-tree?post=95888&uid=4798 Could it be that Neo-Fisherian economics causes the Fed to bark up the wrong tree. Neo-Fisherian economics is also tied to New Monetarism. I have said before that New Monetarism has captured the thinking of the Fed. I discuss the current Fed situation and get back to the implications of Neo-Fisherian economics through Scott Sumner's insights, and my opinion at the end of the article. So, here are issues facing the Fed: If the Fed raises interest rates, the banks will receive the interest payments that should be remitted to the treasury, to the taxpayers! That will be a serious problem. I wrote that the Fed is predisposed to keep interest rates low. One of the reasons is this very problem, that the Fed cannot afford to pay the treasury if rates are raised. That int