No, they don't. Its just that the policy people responsible for monetary policy tend to have something of a coherent vision and are located in a single decision making body, while fiscal policy requires either supermajority support in both the House and Senate or concurrence of all of the House, Senate, and Presidency. And the visions of the "correct" fiscal policy between the two major parties have almost no overlap anymore. There's a whole lot more focus by policy people collectively on fiscal policy than monetary policy, just not nearly as much effective action because of the structural impediments.
In the very short term, that's true. In the medium-to-long term, they're kind of the same thing. Fiscal and monetary policy are handled by independent bodies, but they're not entirely uncoordinated. They're both different hands of the same overarching body too: the US government.
I think it's a mistake to assume that fiscal policy and monetary policy need to be linked.
The United States (although the federal government has expanded to a level I hope does not happen in Europe) provides an example. There are many state governments which have a dire financial situation. No one suggests the abandonment of the US dollar over it - it's understood that it's possible to have one group managing fiscal policy with a different group managing monetary policy.
I think the same applies to Europe.
And I actually do think that bankruptcy would solve core issues: a clean slate would allow things to be built a new in a more sustainable way.
It's my understanding that bankruptcy did wonders for New Zealand. It's not a wonderful option, but sometimes it's all that is left. And it's the only way capitalism works.
> and we had Quantitative Easing where the Fed bought treasuries for a few years after 2008. And, in fact, the current Fed chair just lowered interest rates on recession fears.
Not to necessarily disagree with your first points, but these latter two examples are "monetary policy" which is supposed to be independent of political processes and distinguishable from "fiscal policy" which is the spending of the US govt and necessarily political.
This is true, but it isn't uncommon. Almost all countries have different levels of government - national, regional, subregional and municipal - all of which have some degree of autonomy with regards to executing their own fiscal policy, whereas monetary policy is always country-wide.
Do you really expect the entire country to change its monetary policy in order to accommodate the peculiar way in which you conduct your finances? That doesn't seem very reasonable.
"Certainly (as you hint at) the government can also implement fiscal policies in addition to the Fed's monetary policies but few people believe that fiscal policies can be effective on their own."
It does answer your question - what you're misundestanding is that "distributing money throughout the economy" is fiscal policy, not monetary policy.
That's what the OP meant by "fiscal policy is necessary" and "the government dropped the ball on fiscal policy". The Federal Reserve, as a body, and monetary policy in general by extension, does not posses the tools to enact fiscal policies.
Monetary policy isn't fiscal policy. Perhaps monetary policy is preventing politicians from facing the consequences of bad fiscal policy, but the alternative is suggesting accelerationism. It's not countries that relied on gold never overspent themselves to ruin.
Ahh, I see. I think I understand the confusion now. I believe our primary disagreement here lies in the fact that you don't see /u/airstrike not differentiating between fiscal and monetary policy in his/her original comment, as a major red flag, whereas from my perspective I do.
Right, that's what I would refer to as a "command economy": an economy where the government cancels broad categories of monetary flows and substitutes itself as an arbiter of who should do what work. I don't think the government would be good enough at central planning for that strategy to help.
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