ST Alpha - "They are tied together to a meaningful degree. Fiscal policy drives responses as you suggest. But the gist is that increased spending and deficits " (Reading a Post)

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In response to "My broad thinking is that monetary policy can only do so much. Changes in fiscal policy are needed as well, primarily to deconcentrate wealth" by znufrii

They are tied together to a meaningful degree. Fiscal policy drives responses as you suggest. But the gist is that increased spending and deficits

Posted by pmb (aka pmb) Aug 3 '21, 14:15

require the fed to "print more money" and there remains room to do that. Even democratic politicians feel the need to "pay" for all of the spending by taking from other programs or increasing taxes. There may be policy reasons to do those things, but it shouldn't be viewed as a fiscal need. We are not really near the point where that is a risk.

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The Fed doesn’t directly finance deficit spending though, which is the disconnect I’m seeing. -- nm - znufrii Aug 3, 14:19 2
- This is somewhat old, but helps explain. It is based on how they react or help accommodate the deficits. -- (link) - pmb Aug 3, 14:40 1
  - Here is a summary of MMT. As discussed it focuses on fiscal policy (the fed's involvement is how they react to the additional money in the system to -- (edited) - pmb Aug 3, 14:44
Too few people look at the economic impact of spending, just the balance sheet. If the gov't can spend $1 and return $3 in economic activity - TWuG Aug 3, 14:17

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They are tied together to a meaningful degree. Fiscal policy drives responses as you suggest. But the gist is that increased spending and deficits

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