Keith M. Carlson examines the importance of money growth assumptions in the assessment of this ratio. Simulations of a modified version of the St. Louis model are used to determine the effect of alternative growth paths of M1 on federal deficits and the federal debt-GNP ratio. The conclusion derived from these simulations is that faster money growth makes it easier to reduce budget deficits. Therefore, plans to reduce deficits over time must be coordinated with monetary policy actions if they are to achieve their desired results. Further, the usefulness of reducing deficits via faster money growth must be weighed against the resulting associated inflationary costs.