Site Sources
Some readers may prefer to begin with the more user-friendly Introduction to Deposit Deflation.
This site builds its depiction of the U.S. money system on primary sources — our money system’s own documentation. For the convenience of those who are following up on comments made elsewhere, Deposit Deflation goes “deep in the weeds” immediately and links to its primary sources right on the home page.
Some of these sources appear to contradict the claims of well-known money theorists, and these discrepancies are addressed in linked discussion pages.
United States Central Summary General Ledger (2018)
- This shows that Cash is an asset to the U.S. Government. Even mutilated paper currency is shown to be an asset. Treasury Securities are liabilities of the U.S. Government; outstanding U.S. currency is not.
- Consider: if the U.S. Government could simply print Federal Reserve Notes in large denominations, and spend them directly or deposit them into the accounts of payees, it would not be increasing its indebtedness. But it can do no such thing, for reasons to be shown below.
- Some money theorists describe paper currency and coins as U.S. Government liabilities, or even U.S. Government debt. The balance sheet shows otherwise.
- Link: https://www.fiscal.treasury.gov/files/reports-statements/combined-statement/cs2018/sc1.pdf
- Our discussion: Does Paying Taxes Destroy Money?
Financial Statements of the Board of Governors of the Federal Reserve System – 2017
- These show that Cash is likewise an asset to the Board of Governors, the federal agency that sets interest rates and promulgates monetary policies and regulations. The Board of Governors itself owns no U.S. Government debt.
- Link: https://oig.federalreserve.gov/reports/board-financial-statement-audit-mar2018.pdf
- Our discussion: Bank Reserves and Treasuries: Like Savings and Checking Accounts at the Fed?
Federal Reserve Bank of Minneapolis – Statement of Conditions 2017
- This shows that paper currency outstanding is a liability of the Federal Reserve Banks. U.S. Treasuries and Coins are assets of these banks.
- Link: https://www.federalreserve.gov/aboutthefed/files/minneapolisfinstmt2017.pdf
- Our discussion: Bank Reserves and Treasuries: Like Savings and Checking Accounts at the Fed?
“Who Owns the Federal Reserve Banks?” – Federal Reserve Bank of St. Louis
- This shows that Federal Reserve Banks acknowledge that they are not part of the U.S. Government
- Link: https://www.stlouisfed.org/in-plain-english/who-owns-the-federal-reserve-banks
- Our discussion: Does Paying Taxes Destroy Money?
12 U.S. Code § 502 – Liability of shareholders of Federal reserve banks on contracts, etc.
- This section of the U.S. Code shows that Federal Reserve Bank Liabilities are liabilities of their shareholders.
- Link: http://www.law.cornell.edu/uscode/text/12/502
- Our discussion: Bank Reserves and Treasuries: Like Savings and Checking Accounts at the Fed?
- This shows that the remittances of the Federal Reserve Banks to the U.S. Treasury were known as “Franchise Taxes” until 1933.
- Our discussion: Bank Reserves and Treasuries: Like Savings and Checking Accounts at the Fed?
“Treasury Services” on the Federal Reserve Banks’ site FRBServices.org
- This shows that “The Federal Reserve Banks serve as fiscal and depository agents for the United States government.”
- Our discussion: Federal Reserve Banks as Agents of the US Government
Uniform Commercial Code § 4-201 – Status of Collecting Bank as Agent
- This shows that every commercial bank is of necessity agent to its depositors/customers.
- Our discussion: Federal Reserve Banks as Agents of the US Government
Treasury Financial Manual – Part 5 Chapter 2000
- This shows that a U.S. Government agency that receives U.S. currency in the course of business is obliged to deliver such currency to a “commercial bank authorized to accept TGA (Treasury General Account) deposits.”
- Link: https://tfx.treasury.gov/tfm/volume1/part5/chapter-2000-depositing-domestic-checks-and-cash-received-over-counter-otc (open to Section 2030)
- Our discussion: Does Paying Taxes Destroy Money?
- This document describes the loans the U.S. took from commercial banks in New York and Philadelphia to pay public officials and, significantly, the acceptability of those banks’ own notes in payment of Customs duties.
- Our discussion: “Where did the First Taxpayers Get the Money to Pay Federal Taxes?”
Treasury Department Circular to the Collectors of the Customs – 22 February [5–March] 1793
- Hamilton’s instructions to the Collector of the Customs to treat as cash the private notes of merchants indebted to the Treasury when such notes were written in the Treasury’s favor. The Bank of the United States would augment the U.S. Government’s checkwriting accounts immediately, while collecting from the merchants over time.
- Our discussion: “Where did the First Taxpayers Get the Money to Pay Federal Taxes?”