The Federal Reserve Monitors the Economy to Ensure Money Flows and Prices are Stable
The Federal Reserve generates and destroys money through the Treasury and banks.
In this image, the Treasury has a deficit of $0, and the banks have a deficit of $5T.
Note: the banks have a FED deficit of $2T and the Treasury has a FED surplus of $2T. The $2T surplus comes from selling Treasury bonds and bills.
In this image, the Treasury General Account (TGA) generates funds for the federal, state, and local governments after approval by Congress.
There are twelve regional Federal Reserve Banks to monitor the economy at the state and local level. The Treasury General Account, Open Market Operations (OMO), and Overnight Reverse Purchases (ON RRP) exist only on the Federal Reserve Bank of New York.
Local economies require a continuous flow of new money. The regional Federal Reserve Banks monitor their regional economies to ensure that the money is flowing.
Almost all money eventually becomes liquidity for large investors and financial groups. The OMO, ON RRP, and interest on reserve balances are used to channel this liquidity away from the economy or to slow its accumulation.