Since taxes can be paid in coin, it's clearly a liability to the treasury regardless of whether it's recorded on a balance sheet as such. In practice a coin is

Since taxes can be paid in coin, it's clearly a liability to the treasury regardless of whether it's recorded on a balance sheet as such. In practice a coin is a token that represents a liability at the Fed much like a deposit. That token can be used to claim an actual deposit at the Fed (by agents, not little people, obviously). I'm not aware of a law that requires a coin be bought by the fed at face value. It just seems to be the historical norm. If you're aware of such a requirement please let me know. In summary, the coins are not the "money", they're just tokens that for historical reasons the fed buys from the treasury at face value and can record at face value in their balance sheet. It could in principle just as easily be the case the fed is not required to balance with anything from the treasury (e.g. not T-bills) against new money creation - they're just forced to hand over the deposits to the control of the treasury. The net effect would be exactly like the coin case (hence the trillion dollar coin nonsense).