> I mean that when Greece says "I will put €x in your bank account", they can. They don't need to get those euros from somewhere else. They can just make them appear in your bank. That's why they can run deficits without running out of money.
The Greek government cannot create EUR by fiat. Only the ECB has that power. Any EUR that they could place into an individual entity's account would need to come from tax receipts or some kind of loan (Gov Bonds, loan from IMF etc.). Developed economies run deficits by issuing government bonds and selling them to the open market. If for whatever irrational reason there were infinite market appetite for Greek bonds there never would have been a debt crisis - they could have kept on raising money in the market and running a deficit.
> This is basically "where euros come from." They're spent into an economy by governments. The ECB keeps track of how much each government spends, less taxes collected. The diff becomes "national debt." Money owed to the ECB.
National debt for developed countries is mostly money raised by issuing government bonds in the international bond market. The ECB does not loan member states money directly. In extreme cases like the European Debt Crisis[0] they buy sovereign bonds in the open market (effectively a loan). Money is created by the ECB's interactions with the banking system [1], not government spending.
> The ECB decides interest rates, but this is basically just accounting. Greece will never have a persistent surplus, where ECB loans are paid down. Neither will other member states. So, interest "payments" just determine how fast the national debt grows.
The interest rate the Greek government pays on its debt is not determined by the ECB. It determined by the open market when they issue bonds. The interest rates the ECB sets [2] directly affect the banking system and not government borrowing rates.
" ... Any EUR that they could place into an individual entity's account would need to come from tax receipts or some kind of loan ..."
I think it is, explicitly, only the loan that is the source of the EUR in your example.
I think MMT suggests this very simple relationship:
Money is created by loans and destroyed by taxes.
This is unexpected as most people think tax receipts somehow bolster the "account" of the government but what MMT is telling us is that the account has no significance because the government arbitrarily controls it.
The Greek government cannot create EUR by fiat. Only the ECB has that power. Any EUR that they could place into an individual entity's account would need to come from tax receipts or some kind of loan (Gov Bonds, loan from IMF etc.). Developed economies run deficits by issuing government bonds and selling them to the open market. If for whatever irrational reason there were infinite market appetite for Greek bonds there never would have been a debt crisis - they could have kept on raising money in the market and running a deficit.
> This is basically "where euros come from." They're spent into an economy by governments. The ECB keeps track of how much each government spends, less taxes collected. The diff becomes "national debt." Money owed to the ECB.
National debt for developed countries is mostly money raised by issuing government bonds in the international bond market. The ECB does not loan member states money directly. In extreme cases like the European Debt Crisis[0] they buy sovereign bonds in the open market (effectively a loan). Money is created by the ECB's interactions with the banking system [1], not government spending.
> The ECB decides interest rates, but this is basically just accounting. Greece will never have a persistent surplus, where ECB loans are paid down. Neither will other member states. So, interest "payments" just determine how fast the national debt grows.
The interest rate the Greek government pays on its debt is not determined by the ECB. It determined by the open market when they issue bonds. The interest rates the ECB sets [2] directly affect the banking system and not government borrowing rates.
[0] https://en.wikipedia.org/wiki/European_debt_crisis [1] https://www.ecb.europa.eu/ecb/educational/explainers/tell-me... [2] https://www.ecb.europa.eu/stats/policy_and_exchange_rates/ke...