Treasury Tax and Loan
Encyclopedia
Treasury Tax and Loan Service is a service offered by the Federal Reserve Banks of the United States
that keeps tax
receipts in the banking sector by depositing them into select banks that meet certain criteria.
Because banks create money (see money multiplier
) based on their reserves
, if the Treasury were to not redeposit the money they received for taxes, then such payments would either threaten the liquidity of the banking sector, or result in a collapse of the higher monetary aggregates (M1, M2, M3, and L
) resulting in deflation. TTL accounts are an attempt to limit the effect of taxation on monetary policy
.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
that keeps tax
Taxation in the United States
The United States is a federal republic with autonomous state and local governments. Taxes are imposed in the United States at each of these levels. These include taxes on income, property, sales, imports, payroll, estates and gifts, as well as various fees.Taxes are imposed on net income of...
receipts in the banking sector by depositing them into select banks that meet certain criteria.
Because banks create money (see money multiplier
Money multiplier
In monetary economics, a money multiplier is one of various closely related ratios of commercial bank money to central bank money under a fractional-reserve banking system. Most often, it measures the maximum amount of commercial bank money that can be created by a given unit of central bank money...
) based on their reserves
Bank reserves
Bank reserves are banks' holdings of deposits in accounts with their central bank , plus currency that is physically held in the bank's vault . The central banks of some nations set minimum reserve requirements...
, if the Treasury were to not redeposit the money they received for taxes, then such payments would either threaten the liquidity of the banking sector, or result in a collapse of the higher monetary aggregates (M1, M2, M3, and L
L
Ł or ł, described in English as L with stroke, is a letter of the Polish, Kashubian, Sorbian, Łacinka , Łatynka , Wilamowicean, Navajo, Dene Suline, Inupiaq, Zuni, Hupa, and Dogrib alphabets, several proposed alphabets for the Venetian language, and the ISO 11940 romanization of the Thai alphabet...
) resulting in deflation. TTL accounts are an attempt to limit the effect of taxation on monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
.