debt free Electronic Public Money (EPM) Creation Process
According to the U.S. Treasury Financial Manual 5-3000 the custodian of the U.S. Treasury General Account (TGA) is the Federal Reserve Bank of New York (FRB NY).
1. Each EPM creation Order (EPM/CO) originates with Congress or the Congressional Monetary Authority (CMA), the latter being an independent Congressional agency operating in parallel with the Congressional budget office (CBO), and charged with the responsibility of authorizing EPM Creation Orders subject to limitations which preserve the value of the dollar, i.e. which prevent inflation or deflation;
2. Each approved EPM/CO is transmitted to the Treasury Department, signed by the Secretary of the Treasury, and forwarded to the FRB NY;
3. The FRB NY credits the TGA with the stated amount of new public money as indicated on the EPM/CO (no account is debited when this TGA balance augmentation is carried out);
4. The Treasury Department confirms the completion of the new electric public money deposit by the FRB NY, and acknowledges receipt of the new money by transmitting a Certificate of Public Money Creation to the FRB NY;
5. The FRB NY staples the Certificate of Public Money Creation to the EPM/CO that initiated the deposit, and maintains a file of all such money creation documents as they are processed from time to time.
1. EPM created in this way does not increase the national debt, as there is nothing to pay back, EPM is debt free;
2, Although no account is debited as the source of the new money, it may be thought of as a deposit by Uncle Sam;
3. The new money circulates in perpetuity, never having to be repaid to the FRB NY or any other financial entity; there is no due date when the money has to be paid back; it may therefore be referred to as permanent money as opposed to the money created by banks, which is temporary money, extinguished when paid back;
4. The EPM creation process is not "visible" to the commercial banks or branch banks of the Federal Reserve, hence its occurrence does not require any changes in any accounting practices currently used by the commercial banks or the Federal Reserve Banks, other than the requirement that the FRB NY keep a file of documentation for the money creation events carried out at the request of the Treasury Department on behalf of Congress or the CMA;
5. Expenditures of the new EPM may be for any purpose specified by Congress or the CMA, but need not be specified on the EPM/CO transmitted to the FRB NY;
6. Although the TGA augmentation is carried out by the FRB NY, it is only done so at direction of the Treasury Department on behalf of the Congress or the CMA. Hence the money is referred to as debt free Government Created Money or simply Electronic Public Money. It blends perfectly with, and is of the same nature as, the money that was already in the TGA at the moment the balance augmention is carried out by the FRB NY.