Can they do something about the budget deficit? Is there a relationship between Fiscal and Monetary Policy?

Question

There is no doubt that Fed, the Central Bank of the United States, plays enormous and often successful role in the economy.

Answer 1

Back in the '90s while Bob Dole was Majority Leader of the Senate, there was an attempt to pass a Constitutional Amendment to Balance the Budget. As I recall it was close and a pair of Senators from North Dakota voted no, which killed the Amendment. Had we passed that Amendment and 2/3rds of the States ratified it, Congress would be mandated to only spend what it receives in taxes. As such, Congess now spends far in excess of what it receives in taxes. It issues debt to make up the shortfall, thus passing the repayment cost onto the children born tomorrow.

WE HAVE TO STOP THIS NOW.....

We will be a history book chapter, right up there with the downfall of the Roman Empire if we don't stop spending...

Answer 2

In economics ever there is solutions the problem is the solution could be politically and socially inconvenient; so budget deficit can be reduced.

Fiscal policy and monetary policy have strong conection; any measure taken by one side will repercute in the other face.

Answer 3

Well obviously they could stop spending more than they have to stop the budget deficit from growing.  That's what we call an austerity program when South American or African countries borrow more from us than they can easily repay.  The difference is it'd be political suicide for any politician that votes to cut any of about 90 percent of the budget.  With the trade deficit what's happening right now to the country's economy is about the best way to trim that.  Look what a painful adjustment that is to our economy though.  Raise the prices of all our imports and lower our exports.