Just a couple of important items that will help in understanding our monetary system:
The entire system is built around defending a gold reserve and uses dual entry spreadsheet accounting. This is standard in tracking money anywhere in the world. The government never “has” money because it doesn’t mean the same in the government sector that it does in the private sector and the government never “needs” money to spend money, being the monopoly issuer of the currency. This is enabled by the creation of a negative entry in the government sector for each dollar created in the private sector via any spending. This allows the accounting for that money to be balanced to zero, as all spreadsheets demand for error checking and to track the origin and destination of money spent or received across accounting sectors.
Labeling of the category representing money spent above that received as a deficit, and the accumulation of deficits as “debt” is misleading in that it implies a required repayment, which is physically impossible. Money must be available in the private sector to enable the collection of taxes or to borrow, so money created for either purpose creates its own debt entry. The reference to debt only means that the government “owes” tax credit to anyone who holds a unit of its currency. At one time it also meant owing a dollar's worth of gold but that ended domestically in ’34 and internationally in ’71.
Treasury bonds are issued as needed to “match” deficits to draw down the total currency, not to fund spending, as the spending had to happen first. As the dollars used to purchase bonds enter the government sector they are balanced to zero by the debt entry waiting for them in the government sector. Upon maturity of the bonds, they are recapitalized with new money creation and new debt. This difference between how the entities deal with the currency is what creates the need for a private sector central bank to act as the clearing bank for Treasury to keep “dollars” (private sector) separated from “debt” (government sector).
