What is the process to develop an economic policy that provides services and sustainability?

According to our reading there are two parts to any economic policy, there is the fiscal policy and the monetary policy. The fiscal policy regulates the government and the monetary policy regulates the economy. I don’t understand, however, why the economy gets better when the government is running a budget deficit. This doesn’t make sense to me. If I am in great deal of debt I curb my spending and try to get my debt under control. I stop purchasing nonessential items. The government on the other hand, finds that if they are in debt it actually stimulates the economy and more people will purchase goods. Bill Clinton, for all the bad that he did, not only balanced the budget but got us into the largest surplus in American history. What is puzzling me is how could we be running on a surplus if we still had a national debt? I guess from further reading it comes down to definitions. The deficit is what we borrow from other countries and the debt is what we owe. My question is then, why do we keep borrowing money from other countries? Why is it making for a good economic policy to borrow money, not only when we are still trillions of dollars in debt, but borrow from other countries?
So now we have the beginnings of our economic policy. We have borrowed money from another country; we also need to supplement this with taxes from several difference places. We need to not only tax individuals but businesses and corporations as well. Now we have the money, we need to spend it. First we have to pay interest and make payments on the money that we borrowed and then we need to spend money on the entitlement programs. The entitlement programs include such things as food stamps and social security: things to help people that cannot help themselves.
The monetary policy tries to play the gamble game. By manipulating interest rates it either stimulates or slows down the economy. When interest rates are high, the top 20% do very well; they make more money and save more money. However, the rest of the United States can barely buy a pack of gum, buying a house or a car would be out of the question. On the other hand, when interest rates are low, the top 20% doesn’t do as well because there is not as much bang for their buck. However, the rest of the United States has a little party because they can now afford to purchase things that they were not able to before. I like the fact that the interest rates are regulated by a Federal Reserve Board that does not report directly to the government. I think that this allows the FED to actually do what is in the best interest of the American public. The one concern that I have is that the people that are on this board are mostly employees of huge banking conglomerates. I think this is the part of the economy that allows for the sustainability.
So in order to provide services and sustainability an economic policy not only needs to allow the government to control some saving and spending and allow a private neutral entity to do the same. By allowing both of these entities to balance each other out we are able to have an economic policy that is tolerable. If one group is happy with an economic policy then I don’t think it is doing its job. Also, from this week’s reading, I finally found out what Alan Greenspan did. My entire adult life I always wondered who is this Alan Greenspan and why should we listen to him and now I know.