The Federal Reserve and Fiscal Responsibility

When the Fed creates money to purchase bonds, the Treasury spends it. Where does that newly created money get spent? Government contracts.

Since the Fed is legally responsible for managing the economy and it is officially considered part of government, fixing that journal entry is possible: an accounting rule or legislation to ensure the Fed cannot create money to lend to the Treasury.

The above would not immediately balance the budget, but would place the Fed on the side of fiscal responsibility.