Dollars exist, but in what form; who created them, and how?

Dollars exist, but in what form; who created them, and how?

The uninformed may respond that dollars are pieces of green paper printed by the U.S. Treasury.

That answer would be incorrect on every level.

Those green pieces of paper are not dollars. Rather they are bearer titles to dollars. They are official recognition that the bearer owns a dollar.

Why is the US currency called dollar? what is its origin and meaning? - AS USA
These are not dollars. They are bearer titles to dollars

A house title is not a house. It is official recognition that the named person owns a particular house.

A car title is not a car, It is official recognition that the named person holds a certain car.

Dollars exist only as bookkeeping notations. They have no physical form.

You cannot see, feel, hear, touch, smell, or taste dollars.

The Treasury does not literally print dollars. It just prints titles to dollars, which exist as numbers in bank accounts.

All dollars are created from thin air by marking up accounts. Banks do it every minute of every day.

Consider the following scenario:

1. You go to a store, make a $10 purchase, and pay with your credit card.

Because you have a contract with the credit card company, you essentially have signed a loan document (the credit card receipt) saying you owe the credit card company $10.

That loan document, and all dollar-denominated loan documents, are titles to dollars.

Mark Wagner | IOU | Artsy
A dollar bill is a bearer check signed by the Secretary of the Treasury.

So, your use of a credit card makes dollars.

(The green dollar bill in your wallet is a loan document. It signifies debt. It is a federal reserve note. “Bill” and “note” are words denoting debts.)

2. The credit card company sends instructions (not dollars) to the store’s bank, telling it to increase the balance in its checking account.

When the bank obeys those instructions, new dollars are created. These instructions are in the form of a check or wire transfer.

Simultaneously, the balance in the credit card company’s checking account is reduced, which destroys dollars.

At this stage, your purchase has caused the creation of ten dollars, a few cents of which go to various governments’ banks for sales taxes.

This bearer check is identical to a dollar bill, with one exception. The full faith and credit of the U.S. government backs a dollar bill. The full faith and credit of the writer backs the check. 

3. Instructions among the several banks pass through the Federal Reserve, while the credit card company sends you a ten-dollar invoice.

To pay the invoice, you instruct your bank to send instructions to the credit card company’s bank, telling it to increase the balance in the credit card company’s checking account.

Those instructions are cleared through the Federal Reserve, and when your bank receives them, it reduces the balance in your checking account and destroys dollars.

Your one-time use of your credit card creates and destroys dollars.

At no time are physical dollars exchanged for there are no physical dollars.

All dollars are nothing more than numbers on financial institutions’ books.

Not being physical, dollars cannot be “sent.” Instead, instructions in the form of checks or wires are sent to banks.

The banks are instructed to create and destroy dollars by changing the numbers in bank accounts.

What if that $10 purchase were made in cash rather than by credit card? Cash, i.e., dollar bills, are bearer titles to dollars. “Bearer” title means whoever has the title in their possession owns the dollars, which are numbers on the Treasury’s books.

All money represents a debt of the issuer, which among other things, owes the user full faith and credit.

You accept dollar bills in exchange for goods and services because you trust the full faith and credit of the federal government.

In, “Understanding Federal Debt. Full Faith and Credit,” you will see this explanation:

All debt requires collateral. The collateral for federal debt is “full faith and credit.”

This may sound nebulous to some, but it involves certain, specific, and valuable guarantees, among which are:

A. –The government will accept only U.S. currency to pay debts to the government.

B. –It unfailingly will pay all its dollar debts with U.S. dollars and will not default.

C. –It will force all your domestic creditors to accept U.S. dollars to satisfy your debt if you offer them.

D. –It will not require domestic creditors to accept any other money.

E. –It will take action to protect the value of the dollar.

F. –It will maintain a market for U.S. currency.

G. –It will continue to use U.S. currency and will not change to another currency.

H. –All forms of U.S. currency will be reciprocal; that is, five $1 bills always will equal one $5 bill and vice versa.

There is no law prohibiting the issuance of other forms of currency. For example, I have every right to issue “Mitchellbucks” to pay my debt to you.

I never can run short of Mitchellbucks. I can create infinite numbers merely by writing a check specifying Mitchellbucks.

However, you have no obligation to accept them. Presumably, you only would accept Mitchellbucks if you were satisfied with the full faith and credit that backs them.

By contrast, Americans must accept U.S. dollars in payment of debts. It’s the law, which is determined by the federal government.

Various forms of currency exist in America.

Trillions of coupons are distributed by manufacturers and retailers, and are used and accepted by consumers and businesses for certain, limited purposes.

A story: I worked with the man who owned PAM, a cooking spray.

His name was Arthur Meyerhoff (Little-known fact; PAM stands for Product of Arthur Meyerhoff.)

Early in the life of the product, he ran a $1 coupon in the Readers Digest Magazine, which then had a massive circulation. Unfortunately, more coupons were presented for redemption than cans of PAM sold.

Meyerhoff was on the hook for millions.

Had he not paid up, his full faith and credit would have been worthless. But he paid. Stores and consumers continued to trust his company and his full faith and credit.

Poker chips are titles, backed by the full faith and credit of casinos. Lottery tickets are backed by the full faith and credit of the various states.

Your personal check is backed by your full faith and credit, augmented by laws against bouncing checks.

A money issuers’ ability to create currency is unlimited but the acceptance of that currency relies on the issuer’s full faith and credit.

Because the federal government is Monetarily Sovereign, i.e sovereign over the U.S. dollar, it’s ability to issue dollars is limited only by their acceptance, which in turn, is limited by federal full faith and credit.

In reality, the federal government’s ability to create dollars is unlimited.

Thus, those who are concerned about the size of the federal government’s debt, (i.e. the number of dollars in existence), must explain the limit to the U.S. federal government’s full faith and credit.

If anything, the full faith and credit of the ,U.S. government is more powerful worldwide than ever. 

Despite (perhaps because of) massive increases in deposits into T-security accounts there is no hint of the federal government’s inability to create dollars and have them accepted.


Dollars have no physical existence. They are numbers in bank accounts.

The federal government is Monetarily Sovereign. As the issuer of dollars, it is sovereign over U.S. dollars in whatever banks they exist.

The government creates dollars by changing numbers in bank accounts. There is no limit to the number of dollars the government can create, because it also the creates the laws that govern dollar creation.

Thus the federal government cannot unintentionally run short of dollars.

Federal taxes do not fund federal spending. Even if the Monetarily Sovereign federal government collected $0 taxes, it could continue spending forever. (By contrast, state/local taxes do fund monetarily non-sovereign state/local government spending.)

Similarly, the federal government never borrows dollars. Why would it, given its unlimited ability to create dollars. What erroneously is termed “borrowing,” is the acceptance of deposits into T-security accounts. The purpose is to provide a safe storage place for unused dollars and to help the Federal Reserve control interest rates.

These accounts do not provide the federal government with spending dollars. The government creates new dollars every time it pays a creditor.

Being dollar users, not issuers, state/local governments can and often do run short of dollars.

You create dollars every time you make a credit card purchase or write a check. You destroy dollars every time you pay off a debt.

Because you are monetarily non-sovereign, your dollar creation is limited by your full faith and credit.    


Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell


The Sole Purpose of Government Is to Improve and Protect the Lives of the People.


2 thoughts on “Dollars exist, but in what form; who created them, and how?

  1. Hello,
    I find your writing to be very enlightening. I saw this article below. It says Russia is facing economic collapse due to the war and states that they will run out of money soon. Isn’t Russia monetarily sovereign? Perhaps they are referring to foreign exchange, not domestic currency? Can you clarify this for me please?

    Thank you,

    Allen Sayigh


    1. Good question, Mr. Sayigh. As I have said on numerous occasions, any person or nation can be Monetarily Sovereign. Simply issue a currency. For instance, were you to issue “Sayighbucks,” you would be sovereign over your currency.

      The problem is acceptance which depends on the full faith and credit of the issuer. Russia is sovereign over the Russian ruble. Russia can pay any debt denominated in Russian rubles, but most people, companies, and nations are reluctant to accept rubles.

      Russia can get away with paying its own populace with rubles, but that still will leave the nation unable to import. They need to sell oil to obtain dollars or some other accepted currency, and that is the problem, today.

      By the way, you do issue a currency, and its acceptance depends on your full faith and credit. That currency is your personal check.


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