What happens to the cash flow from the sale of the AIO strip?
The cash flow from the AIO strip is not distributed to the holder of the Millennium Dollars®, since this would subsequently make it impossible for the issuer and sponsor to meet their promise-to-conserve the purchasing power of the MR$. Instead, the sponsor holds the securitized TIPS, and oversees the stripping process; while issuing a special security called the Millennium Dollar® securities (MR$.s) to the issuer. As the AIO strip is sold each month, the payment is made by the sponsor to the issuer holding the MR$.s. The issuer must then either (a) repurchase an equivalent amount of MR$ currency; or otherwise (b) purchase more MR$.s, such that the indexed value of the MR$ currency issued and outstanding always equals the present value of the MR$.s securities. If this standard is met, as affirmed by a formal audit; then the sponsor and issuer have met their promise-to-conserve the purchasing power of the MR$ currency.
