#1 Article 1 Section 8 Clause 5: The Congress shall have power; To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

Clause 5 allows for coin, Clause 2 (To borrow Money on the credit of the United States) allows for USN's, gold and silver certificates of the past.

#2 McCulloch v. Maryland, 17 U.S. 316 (1819), "Although the Constitution does not specifically give Congress the power to establish a bank, it does delegate the ability to tax and spend, and a bank is a proper and suitable instrument to assist the operations of the government in the collection and disbursement of the revenue. Because federal laws have supremacy over state laws, Maryland had no power to interfere with the bank's operation by taxing it. Maryland Court of Appeals reversed."

So a state cannot tax monies issued directly from the Treasury via a bank acting as the agent for the Treasury. Those would be the monies described above issued directly by the Treasury via a bank. The state would also be prohibited from taxing you if you were receiving monies via a bank directly issued by the Treasury.

#3 Enter the Civil War and the National Banking Act and the first income tax acts.

These lead to Veazie Bank v. Fenno, 75 U.S. 533 (1869). Where it was stated: "Congress may restrain (TAX), by suitable enactments (26USC), the circulation as money of any notes not issued under its own authority. Without this power, indeed, its attempts to secure a sound and uniform currency for the country must be futile."

#4 Now enter the Federal Reserve that is partly public and mostly private.

Per McCulloch a state cannot tax a function of the U.S. government. In this case a bank issuing coin or notes that were issued by the Treasury. The bank is merely acting as the Treasuries agent/conduit. That is a public part of the Federal Reserve. HOWEVER the Fed may also issue FRN's or their electronic equivalent at its discretion (12USC411). Those ARE NOT issued by the Treasury and are outside the direct control of Congress.

SOOOO...per Veazie Bank Congress may restrain the issuance of those FRN's or any medium of exchange that it does not directly issue.

Also tying this together....Because the issuance of things that circulate AS MONEY but ARE NOT in fact money (which can only be produced by the Treasury), the states can also tax it because it is not infringing on a federal power satisfying the limitations set out by McCulloch.

What's in your wallet?