>> Same goes for reserves, that money isn't just dropped out of a helicopter with no strings attached, all that money introduced is backed by a commitment to re

>> Same goes for reserves, that money isn't just dropped out of a helicopter with no strings attached, all that money introduced is backed by a commitment to repay it. This is true. However, the second half of this isn't always intuitive. Bonds come with a commitment to redeem and pay an interest rate... but both commitments are in USD. Both USD and US bonds are accounts at the federal reserve. An institution holding bonds has an account, where they can buy a bond with a dollar or redeem a bond for a dollar. Their bond account will decrease by a dollar, and their dollar deposit account will increase by a dollar. No one's net position changes. Imagine if the rules were reversed: the treasury mints coins, deposits them in the Fed and receives bonds which it can spend.