The Life Cycle of Money
February 2026 36 min read
I wanted to understand how money actually works. Not the metaphors about printing presses or vague explanations about central banks, but the actual accounting entries, balance sheets, and institutional mechanics. Every explanation I found either treated money as a physical commodity or skipped over the details with hand-waving. So I traced the full lifecycle myself: where does legal authority to issue currency come from, how do central bank balance sheets expand, what happens when a commercial bank makes a loan, how do payment systems actually move money, and why do trade deficits result in foreigners holding Treasury securities. This is what I found.