If you want a deep and clear understanding of the current monetary system, as well as the only other possible models under double entry accounting, click the link below for my paper on SSRN. In-joy! https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7533201 Abstract This paper presents a ledger-based analysis showing that, because modern currencies are issued as liabilities of the issuer, double-entry accounting limits fiat currency systems to two structural frameworks: a direct “spend-first” circuit (Model 1) and a segmented institutional “tax-andborrow” circuit (Model 2). Using the mathematical identities of double-entry bookkeeping, the paper traces balance sheet expansion, contraction, asset swaps, and liability swaps across central bank, treasury, commercial banking, and non-government non-bank public ledgers. While Modern Monetary Theory accurately describes the accounting abstractions of Model 1, an examination of public data and institutional operating frameworks in the United States and the United Kingdom confirms that both jurisdictions operate today under Model 2. We further show that Treasury-issued stablecoins, if introduced, would operate under Model 1, and that Model 1 and Model 2 can, in principle, operate simultaneously without interference. This paper clarifies contemporary macroeconomic debates by showing how structural constraints, such as the UK’s Full Funding Rule and the U.S. Treasury General Account legal framework, determine how fiscal deficits are financed, and in turn whether the aggregate fiat money supply and deposit money supply expand permanently, temporarily, or not at all.