They give it to the banks to pass out- cash received, stores, ATM's, etc.

I believe that the National Treasury (Which isn't technically a Government Agency), distributes the new bills to large banks in order to begin circulation.

they give them out for the bank to pass out, at the same time as the receive the same amount of old money (to balance). Then the nnew money is in, when an old bunch reaches the bank, it disappears.. Some currency bills stay unused, lost in transition and they resurface 20years later which is pretty awesome. Like what???? A 1 dolllar canadian bill??? :)

They send it to my wife who spends it.

The Federal reserve banks send it to banks. (this is just a guess).

The new currency is issued to banks, who pay for it. They may pay for it by exchanging it for old notes, but more often they will pay for it by the same kind of electronic transfer many of us use to pay our bills. However, printing new money is not the way that the total amount of money in circulation is increased. The amount of money in cash is a very tiny fraction of the total amount of money that "exists", and the central banks print/mint enough portable money to ensure that shops and users have enough change for their everyday needs. However, these physical representations of money are exchanged for purely logical representations of the same amount, held on the computers of the banks. "New" money is actually created by the banks. Suppose you borrow $10,000, to buy a car, a house, or start your business. You don't leave the bank with a huge bundle of notes; all that has happened is that the bank has put a debit on your loan account of $10,000 and credit on your current account of $10,000. Suppose you spend this money; it doesn't appear in cash, it moves to another account. Pretend that there is only one bank in town (the whole banking system, for this purpose, acts as a single bank). In which case, when you pay for your car, the money is simply transferred to the car dealers account at the same bank. But this money appears as a new deposit. So that the $10,000 they lent you this morning has come back to them, and they can lend it to someone else this afternoon. Effectively, they have manufactured $10,000. Left to itself, the system can run amuck and produce a financial crash because there is too much money in circulation. So the central bank insists that the local banks deposit a certain proportion of their lending with - perhaps one eighth - with them. So when your $10,000 comes back again, the bank is only allowed to lend on $8,750, and has to deposit $1,250 with the central bank. This damps the whole system down. And the central bank can raise and lower the interest rates they pay on these compulsory deposits. Since the bank is hardly going to charge less interest to relatively risky retail customers than they can get from the rock solid central bank, this controls how much interest they charge you, and hence how likely you are to borrow money and thus increase the money supply. Just as the central bank wants to keep the right amount of cash in circulation to lubricate retail businesses, it wants to keep the right amount of logical money in the system to lubricate wholesale businesses, and also to allow the building up of reservoirs of value such as pension funds.

As a followup: Old bills that go out of circulation are burned in the tune of millions of dollars every day. :) That would be a cool job, "Honey, I burned $10 million in dollar bills today."