Tuesday afternoon’s policy announcement from the Federal Reserve is the economic headline event this week. Observers expect the Fed to acknowledge the darkening economic outlook, after Friday’s latest round of weak jobs numbers. Some say the central bank could resume large-scale purchases of Treasury bonds, in a bid to keep money flowing through the economy at a time when cutbacks are still the norm.

But Pimco, the giant investor whose leaders recently have started fretting about the perils of deflation, reminds readers in a viewpoint piece on its website today that there limits to what monetary policy can accomplish.

Pimco managing director Scott Mather writes that “the policymaking debate seems hopelessly mired in short-term quick fixes designed to support the pre-crisis bubble economic structure.”

The answer to Japanese-style falling prices and weakening economic activity, he writes, lies not in more ammunition being spent by the Fed, but in a large-scale policy change by the government.

Structural economic changes are needed to increase the growth profile of the U.S. Large-scale infrastructure projects involving sustainable energy would move the needle away from oil imports while also creating much-needed jobs. We need to take the global initiative on solar, wind and clean coal; China alone is expected to do more than the U.S. this year on clean energy. Major investment in air and rail travel would also help improve U.S. productivity and competitiveness over a long horizon.

But locked in an ideological political quagmire, the U.S. risks heading down the same path that Japan followed. Deflation risks continue to rise. In this scenario, and just as with Japan, the monetary authority ends up being forced to do some heavy extended lifting.

To rephrase, the problem isn’t that Fed chief Ben Bernanke (right) is out of bullets. The problem is that the current target is already riddled with bullet holes, and our political leaders need to find a new one — by hashing out just what the government can actually do to cushion an economic downturn, rather than more push and pull over spending vs. austerity.

We may begin to get a bit of that discussion when the administration convenes its housing policy debate this month. A broader look at the dysfunctional trinity of housing, finance and government is certainly overdue. Time’s a wasting, though.