What does it mean that the federal government spends money into existence?

When the federal government spends, it creates new money. This is different from how we normally think about spending, where you have to have money before you can spend it.

Here's how it works operationally: Congress authorizes spending. The Treasury instructs the Federal Reserve to credit the bank account of whoever is being paid - a Social Security recipient, a defense contractor, a federal employee. The Fed simply changes numbers in accounts. No physical cash is printed; money is created electronically by adding to account balances.

This is sometimes called 'keystroke money' because money is literally created by entering keystrokes into the Federal Reserve's computer system. The money doesn't come from anywhere in particular - not from taxes collected, not from bonds sold, not from some vault. It's created new in the act of spending.

This might seem strange, but it's how all modern money systems work. Money is not a finite resource that exists in fixed quantities - it's an accounting system, a way of keeping track of credits and debits. When the government spends, it creates a credit. When it taxes, it creates a debit. The 'national debt' is simply the running total of credits minus debits that have accumulated in the private sector.

Taxes and bond sales happen, but they don't fund spending - they serve other purposes (managing inflation, providing safe assets, etc.).