Quote Originally Posted by Brian View Post
The local bank is my agent.
The Federal Reserve is the government's agent.
I ask for "money" issued directly by the government (coin or USN's)
I demand it on my paycheck
My agent gets together with the governments agent, The Fed delivers coin to my bank. The bank gives me coin, the check is debited from the account holders (employer) account via the clearing house system.
The Fed now has a deficiency in coin.
The Fed forwards credit to the Treasury, The mint delivers more coin to the Fed and the loop is closed.

The mint creates dollar coins for approx 30cents a piece. The Fed pays for them Dollar for Dollar.
The mint gets approx 70 cents of seignorage (profit) for each coin it delivers to the Fed.
This profit can then pay down the debt (extinguish bonds) or be used for more gov spending.
How simple is that? I like it.