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The state and federal governments enable the bank sector, via the banking franchise, to provide the elastic money supply by making credit entries to bank deposit accounts. A liability account increases by a credit entry; deposits are liabilities of the bank and bank sector; when net new credit entries are made on the books of the aggregate bank sector the money supply increases via the customs of double-entry accounting and via the legal recognition of finance relations. If these credit entries are made in paper ledgers or books, then money supply increases via recording such symbols in books. If these credit entries are made in electronic storage media then the money supply increases electronically. However the money is printed via the debtor-creditor laws and accounting customs and the means of keeping records is just part of the debtor-creditor game.

The state and federal governments enable the bank sector, via the banking franchise, to provide the elastic money supply by making credit entries to bank deposit accounts. A liability account increases by a credit entry; deposits are liabilities of the bank and bank sector; when net new credit entries are made on the books of the aggregate bank sector the money supply increases via the customs of double-entry accounting and via the legal recognition of finance relations. If these credit entries are made in paper ledgers or books, then money supply increases via recording such symbols in books. If these credit entries are made in electronic storage media then the money supply increases electronically. However the money is printed and/or otherwise issued via the debtor-creditor laws and accounting customs. The means of printing notes or keeping records of money as an accounting symbol rather than as a tangible symbol in token form (notes, coins) is just part of the financial game.

The M1 money supply consists mostly of transaction accounts in the aggregate bank and Federal Reserve Notes in circulation. The M1 money supply does not increase by the government printing money to deficit spend because the federal government issues net new Treasury securities to cover the deficit. Treasuries are considered to be risk-free financial assets which exchange easily for money so the money markets are made more liquid via the increase of Treasuries when the government pays for the deficit via the issue of Treasuries.

The state and federal governments enable the bank sector, via the banking franchise, to provide the elastic money supply by making credit entries to bank deposit accounts. A liability account increases by a credit entry; deposits are liabilities of the bank and bank sector; when net new credit entries are made on the books of the aggregate bank sector the money supply increases via the customs of double-entry accounting and via the legal recognition of finance relations.

The M1 money supply consists mostly of transaction accounts in the aggregate bank and Federal Reserve Notes in circulation.

Banks use vault cash to service withdrawal of currency by their customers. Banks use reserve balances at Fed to clear interbank payments and payments with Fed and/or other government agencies kept in the books of the Treasury Department. The government and non-banks clear payment using reserve balances and transaction deposits which is a two-tier payment clearing system.

The M1 money supply does not increase by the government printing money to deficit spend because the federal government issues net new Treasury securities to cover the deficit. Treasuries are considered to be risk-free financial assets which exchange easily for money so the money markets are made more liquid via the increase of Treasuries when the government pays for the deficit via the issue of Treasuries.

The state and federal governments enable the bank sector, via the banking franchise, to provide the elastic money supply by making credit entries to bank deposit accounts. A liability account increases by a credit entry; deposits are liabilities of the bank and bank sector; when net new credit entries are made on the books of the aggregate bank sector the money supply increases via the customs of double-entry accounting and via the legal recognition of finance relations. If these credit entries are made in paper ledgers or books, then money supply increases via recording such symbols in books. If these credit entries are made in electronic storage media then the money supply increases electronically. However the money is printed via the debtor-creditor laws and accounting customs and the means of keeping records is just part of the debtor-creditor game.

How Currency Gets Into Circulation

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Printing Greenbacks During the Civil War

Lincoln’s Greenback Mill: Civil War Financing and the Start of the Bureau of Engraving and Printing, 1861–1863

http://shfg.org/resources/Documents/FH%201%20(2009)%20Noll.pdf

Faced with a breakdown of its war financing scheme because of the failure of bank note companies to produce the needed currency and bonds, the Treasury Department was forced on an ad hoc basis to enter the printing business to meet its needs.

Historically during the Free Banking era gold and silver were specified as money. In theory any private or public institution could mint gold and silver coins. Also in theory anyone could issue currency notes provided others would accept the notes instead of payment in silver and/or gold. Banks would order their own brand of currency notes from private bank note printing companies. During the Civil War the government finance concerns drastically altered both the government customs and financial customs because the Treasury became an even more dominant institution in the financial system.

How Currency Gets Into Circulation

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Financial assets:

1. Vault cash
2. Reserve balances
3. Currency outside banks
4. Transaction deposits
5. Treasury securities