2012 performance

[melveyr]

A great idea right now would be for the government to send every household a check for $5,000.  If this didn't jumpstart the economy, send another $5,000 check in six months, and continue this process until these direct injections of money into consumers' pockets started to show up in strengthening aggregate demand.

But there has to be a downside to this.  There are no free lunches.  

What are the negative effects of a policy like this, and at would point would they become worse than the problem we already have?

I think this is a common Austrian approach to economics. "Government can't ever offer a solution" is their internal starting point for every issue, and then they attempt to build a narrative around that. I think the order of operations is backwards with that.

There are many things that government cannot help with, but insufficient aggregate demand is not one of them. If the market was absolutely perfect, we wouldn't have unemployment in the first place. What sense does it make to idle resources sitting around? In a depression, people won't farm while people starve. They won't build when people are homeless. It is madness. Everyone is gripped with the desire to hoard currency rather than spend/produce.

Spending is the heart of the capitalist economy, and if spending stops, the system breaks down entirely. The real problem is that many actors spend today based on their projections of other actors future spending. There is a feedback loop. This is obviously witnessed as our economy often slams between prosperity and recession, boom and bust. Our economy needs a source of autonomous spending to bring us back into a positive feedback loop. It would be in the private sectors best interest to all resume spending at once, bringing us back into a positive feedback loop, but we all intuitively know that we cannot expect that level of cohesion from a collection of individuals.

The government is by far the easiest way. They are not constrained by revenue, and can spend and spend indefinitely. Their ultimate purpose is to support the private sector by preventing "race to the bottom" behavior. The hoarding of money is definitely a "race to the bottom" that needs to be stopped.

[moda0306]

melveyr for Warren Mosler's VP candidate in 2016.

We gotta bulk you up and get you a beard, because if you're really 21 or so this might be difficult.

[Gosso]

A great idea right now would be for the government to send every household a check for $5,000.  If this didn't jumpstart the economy, send another $5,000 check in six months, and continue this process until these direct injections of money into consumers' pockets started to show up in strengthening aggregate demand.

But there has to be a downside to this.  There are no free lunches.  

What are the negative effects of a policy like this, and at would point would they become worse than the problem we already have?

I think this is a common Austrian approach to economics. "Government can't ever offer a solution" is their internal starting point for every issue, and then they attempt to build a narrative around that. I think the order of operations is backwards with that.

There are many things that government cannot help with, but insufficient aggregate demand is not one of them. If the market was absolutely perfect, we wouldn't have unemployment in the first place. What sense does it make to idle resources sitting around? In a depression, people won't farm while people starve. They won't build when people are homeless. It is madness. Everyone is gripped with the desire to hoard currency rather than spend/produce.

Spending is the heart of the capitalist economy, and if spending stops, the system breaks down entirely. The real problem is that many actors spend today based on their projections of other actors future spending. There is a feedback loop. This is obviously witnessed as our economy often slams between prosperity and recession, boom and bust. Our economy needs a source of autonomous spending to bring us back into a positive feedback loop. It would be in the private sectors best interest to all resume spending at once, bringing us back into a positive feedback loop, but we all intuitively know that we cannot expect that level of cohesion from a collection of individuals.

The government is by far the easiest way. They are not constrained by revenue, and can spend and spend indefinitely. Their ultimate purpose is to support the private sector by preventing "race to the bottom" behavior. The hoarding of money is definitely a "race to the bottom" that needs to be stopped.

Brilliant!

You have my vote!

[murphy_p_t]

"The hoarding of money is definitely a "race to the bottom" that needs to be stopped."


what is the basis of this claim?

[melveyr]

"The hoarding of money is definitely a "race to the bottom" that needs to be stopped."


what is the basis of this claim?

Race to the bottom:

Warren Mosler has a great example. Let's say that everyone goes to a concert after a long day of work. Almost everyone is exhausted and would prefer to sit down. However, let's say that the first row gets excited and decides to stand up. Then the second row, although exhausted, stands up so that they can see the show. Soon everyone at the concert is standing up, when most of them would prefer to be sitting. This is a race to the bottom. If there was a rule/regulation that required sitting, almost everyone would be happier. This is one of the key roles that effective government fills.

This framework is similar for deflation because hoarding money begets more hoarding of money.

If I feel that less money is going to spent in the future, I am less likely to spend today because I worry about my future source of income. This hoarding behavior is rational for me, as an individudual. However, when everyone does this at once the economy effectively stops functioning properly. We would all be better off if we resumed spending, but I am not going to be the first one running to the mall for the same reason why I wouldn't sit down if someone is standing in front of me. There are no martyrs in capitalism.

If the government simply began spending sufficient amounts of money, or taxed less, the race to the bottom would end. Instead of worrying about parting with my money, I would be worried about all of the value added transactions I was missing out on by hoarding it.

[moda0306]

melveyr,

Great example.  I'd point out that a risk of sharp, sharp demand crashes is a huge disincentive for investment, as well... some would say that only malinvestment would have this problem, but I think the general idea is that if "races to the bottom" are real events, and are bad, then they likely affect things that even very conservative people value, such as productive investment.  Any non-necessity can be put off long enough for a good company to go bust during a recession when peoples' priorities drastically change (I tend to think the depression fits this description).

I tend to think one of the saving-graces of a country could be finding a balance of having a social safety net and tax system that automatically responds to recessions in counter-cyclical ways, but without creating large moral hazards along the way... or, in effect, pulling back as demand recovers, keeping people on the ball.

Unemployment insurance is a pretty good example.  Though on the surface it might appear an easy program to abuse, I'd assert that it's only that way if you've already been "laid off."  You can't be fired and receive unemployment, so just slacking off at work doesn't work.  You can't quit and get unemployment, either.

Basically, you likely have to be in a suffering geographical area or industry to begin with to be in that "perfect position" of getting laid off vs fired.  Once that happens, I'm sure people game the system quite a bit, but it was an interesting point made when it was pointed out that because demand is so much more the cause of the recession than supply, that paying people not to work in these situations actually lowers unemployment (until the economy begins to see supply shortages of labor).  I know this gets peoples' blood boiling, but after enough time in the MMR world, I believe it.

[craigr]

It's amazing any free market economy has ever worked before Warren Mosler came along!

The problem with the whole idea of government stimulating demand is that they're just bad at spending money wisely. It will be spent in ways that the market doesn't need and for political purposes that rarely are done for the widespread good. And, even if the money is spent in benevolent ways for the widespread good, who is to decide what this good is? And how much should be spent? And when is enough spent? Etc.

I will take the opposite stand. Even IF we could send $5000 to each person. And even IF we could convince them not to pay down their debts with it, but instead spend it in the economy. And even IF we could convince them to not buy foreign made products boosting the economic benefit primarily to those manufacturers. Then, what do you do once it is spent? Do you perpetuate this indefinitely with $5000 checks? What happens when they stop? Does the economy get boosted artificially with $5000 checks flying around only to have the carpet yanked out from under them when it stops? How does a business determine actual demand from the artificial demand of this spending?

Ultimately, leaving things alone, as imperfect as some may perceive it to be, is the best choice. Individuals making choices for themselves still is the best solution to running an economy.

Lastly, you will *never* have 0% unemployment without putting everyone in a prison and forcing them to work. Some people cannot work, will not work, or simply choose not to work at that particular moment.

[murphy_p_t]

I'm probably setting up a straw-man argument...but I've been wondering what the Mosler adherents will think about deficits when the current 30+ year bond bull market ends....and rates start rising....it seems Mosler's ideas (based on what I've learned here) seem much easier to accept when the US bond market has been in this one-way expansion (bubble?) for over a generation...

[pershing83]

PRPFX is up 5.32% YTD per Mkt Watch.

[AdamA]

Great thread.  I'm very much enjoying everyone's posts. 

Am I talking about a free lunch?  No, I think I am just talking about a way to get the real economy--i.e., the real workers, plant and equipment--closer to full utilization so that we can all come closer to enjoying the full potential output that our economy could be generating.

If we do this by creating money out of thin air, aren't we essentially taking resources from other countries?  Won't there eventually be backlash?

[MediumTex]

It's amazing any free market economy has ever worked before Warren Mosler came along!

The problem with the whole idea of government stimulating demand is that they're just bad at spending money wisely. It will be spent in ways that the market doesn't need and for political purposes that rarely are done for the widespread good. And, even if the money is spent in benevolent ways for the widespread good, who is to decide what this good is? And how much should be spent? And when is enough spent? Etc.

I will take the opposite stand. Even IF we could send $5000 to each person. And even IF we could convince them not to pay down their debts with it, but instead spend it in the economy. And even IF we could convince them to not buy foreign made products boosting the economic benefit primarily to those manufacturers. Then, what do you do once it is spent? Do you perpetuate this indefinitely with $5000 checks? What happens when they stop? Does the economy get boosted artificially with $5000 checks flying around only to have the carpet yanked out from under them when it stops? How does a business determine actual demand from the artificial demand of this spending?

Ultimately, leaving things alone, as imperfect as some may perceive it to be, is the best choice. Individuals making choices for themselves still is the best solution to running an economy.

Lastly, you will *never* have 0% unemployment without putting everyone in a prison and forcing them to work. Some people cannot work, will not work, or simply choose not to work at that particular moment.

In an economy with a fiat currency, where does the first dollar come from?

Is it already there, or does it have some creation event?

In a gold standard world, we know that the first dollar is already there in the form of gold, which can only move from hand to hand and from mine to hand, but with a fiat currency the currency is essentially an abstraction with no physical backing of any kind.  In such a system how does that first dollar come into existence?

[MediumTex]

I'm probably setting up a straw-man argument...but I've been wondering what the Mosler adherents will think about deficits when the current 30+ year bond bull market ends....and rates start rising....it seems Mosler's ideas (based on what I've learned here) seem much easier to accept when the US bond market has been in this one-way expansion (bubble?) for over a generation...

I think that people will discover that interest rates won't rise any time soon in light of the fact that the Fed has essentially committed to buying an unlimited number of treasuries to keep yields down.

As absurd as this sounds, that's the world we're living in.

Here is an interesting question: Does anyone think that yields on treasuries could rise if the Fed was committed to keeping them low?

Here is another question: Does anyone think that the Treasury Department sells treasury bonds, bills and notes because it needs to raise money to fund its operations?  In other words, if the U.S. government paid off the national debt and began running budget surpluses year after year, do you think that the Treasury Department would stop issuing new debt?

[MediumTex]

Great thread.  I'm very much enjoying everyone's posts. 

Am I talking about a free lunch?  No, I think I am just talking about a way to get the real economy--i.e., the real workers, plant and equipment--closer to full utilization so that we can all come closer to enjoying the full potential output that our economy could be generating.

If we do this by creating money out of thin air, aren't we essentially taking resources from other countries?  Won't there eventually be backlash?

We've been creating money out of thin air since 1971, and over that period the U.S. has seen an astonishing amount of economic growth.

Over that period, the more money the U.S. government has created out of thin air, the more economic growth the U.S. has seen, starting in about 1981.

It sounds stupid, but that's the road we've traveled.

[craigr]

It's amazing any free market economy has ever worked before Warren Mosler came along!

The problem with the whole idea of government stimulating demand is that they're just bad at spending money wisely. It will be spent in ways that the market doesn't need and for political purposes that rarely are done for the widespread good. And, even if the money is spent in benevolent ways for the widespread good, who is to decide what this good is? And how much should be spent? And when is enough spent? Etc.

I will take the opposite stand. Even IF we could send $5000 to each person. And even IF we could convince them not to pay down their debts with it, but instead spend it in the economy. And even IF we could convince them to not buy foreign made products boosting the economic benefit primarily to those manufacturers. Then, what do you do once it is spent? Do you perpetuate this indefinitely with $5000 checks? What happens when they stop? Does the economy get boosted artificially with $5000 checks flying around only to have the carpet yanked out from under them when it stops? How does a business determine actual demand from the artificial demand of this spending?

Ultimately, leaving things alone, as imperfect as some may perceive it to be, is the best choice. Individuals making choices for themselves still is the best solution to running an economy.

Lastly, you will *never* have 0% unemployment without putting everyone in a prison and forcing them to work. Some people cannot work, will not work, or simply choose not to work at that particular moment.

In an economy with a fiat currency, where does the first dollar come from?

Is it already there, or does it have some creation event?

In a gold standard world, we know that the first dollar is already there in the form of gold, which can only move from hand to hand and from mine to hand, but with a fiat currency the currency is essentially an abstraction with no physical backing of any kind.  In such a system how does that first dollar come into existence?

Theoretically, the government could operate all their own gold mines and put the gold into circulation but the same problem would exist as with fiat money that they are just not good at allocating capital effectively. So even if they were handing people $5000 in gold to spend the same problem exists. That is when the money stops it has created artificial demand that business has responded to in one of two likely ways:

1) Some business owners just raise their prices and soak up the extra money without expanding knowing the demand won't go on forever. You get inflation, but no real growth or lower unemployment because these business owners will not want to hire as it will drastically increase business costs for a temporary situation.

2) Other business owners do not make the connection about the sudden injection of funds and expand their business wildly. They are thinking it will go on forever only to be shellshocked when it dries up suddenly. Unemployment falls, and then will likely spike again as businesses lay off people to adjust to the situation.

But this is distracting from the main thread. I just don't think making people spend money to grow an economy is so cut and dry. There are unintended effects and even in an ideal situation the outcome will be very unpredictable because people (and the collective culture) are not predictable. Ultimately economies are going to grow and prosper when individuals are trading with each other for mutual benefit. Forcing this to happen is just as likely to cause uncertainty and risk as prosperity. Since business owners are constantly trying to mitigate risks wherever possible, these programs may make a bad situation worse. IMO.

[hoost]

It's amazing any free market economy has ever worked before Warren Mosler came along!

The problem with the whole idea of government stimulating demand is that they're just bad at spending money wisely. It will be spent in ways that the market doesn't need and for political purposes that rarely are done for the widespread good. And, even if the money is spent in benevolent ways for the widespread good, who is to decide what this good is? And how much should be spent? And when is enough spent? Etc.

I will take the opposite stand. Even IF we could send $5000 to each person. And even IF we could convince them not to pay down their debts with it, but instead spend it in the economy. And even IF we could convince them to not buy foreign made products boosting the economic benefit primarily to those manufacturers. Then, what do you do once it is spent? Do you perpetuate this indefinitely with $5000 checks? What happens when they stop? Does the economy get boosted artificially with $5000 checks flying around only to have the carpet yanked out from under them when it stops? How does a business determine actual demand from the artificial demand of this spending?

Ultimately, leaving things alone, as imperfect as some may perceive it to be, is the best choice. Individuals making choices for themselves still is the best solution to running an economy.

Lastly, you will *never* have 0% unemployment without putting everyone in a prison and forcing them to work. Some people cannot work, will not work, or simply choose not to work at that particular moment.

In an economy with a fiat currency, where does the first dollar come from?

Is it already there, or does it have some creation event?

In a gold standard world, we know that the first dollar is already there in the form of gold, which can only move from hand to hand and from mine to hand, but with a fiat currency the currency is essentially an abstraction with no physical backing of any kind.  In such a system how does that first dollar come into existence?

I think about this a lot.  Harry Browne has a book called "99% of All You Need to Know About Money" that gives a pretty good basic overview of money.  I believe most of the text was excerpted from one of his earlier books, so it doesn't explain a true fiat currency (one with no gold link) but it does a pretty good job explaining what money is and how it came into existence.  It's a pretty quick read and is written in HB's usual easy-to-understand style.

[MediumTex]

Theoretically, the government could operate all their own gold mines and put the gold into circulation but the same problem would exist as with fiat money that they are just not good at allocating capital effectively.

I may just have a Warren Mosler worm in my brain, but in a fiat currency world, what is capital?

If the government controls the money supply, to what extent can the government create capital out of thin air?

If the government borrows money through the issuance of treasuries and builds a dam or a highway with the money, in what way does the project differ from one that was financed with more traditional forms of capital?  Maybe it's a less efficient allocation of capital, but this observation itself presupposes that we are talking about capital in the first place.

Again, though, I may just have a touch of Mosler fever.

[MediumTex]

It's amazing any free market economy has ever worked before Warren Mosler came along!

The problem with the whole idea of government stimulating demand is that they're just bad at spending money wisely. It will be spent in ways that the market doesn't need and for political purposes that rarely are done for the widespread good. And, even if the money is spent in benevolent ways for the widespread good, who is to decide what this good is? And how much should be spent? And when is enough spent? Etc.

I will take the opposite stand. Even IF we could send $5000 to each person. And even IF we could convince them not to pay down their debts with it, but instead spend it in the economy. And even IF we could convince them to not buy foreign made products boosting the economic benefit primarily to those manufacturers. Then, what do you do once it is spent? Do you perpetuate this indefinitely with $5000 checks? What happens when they stop? Does the economy get boosted artificially with $5000 checks flying around only to have the carpet yanked out from under them when it stops? How does a business determine actual demand from the artificial demand of this spending?

Ultimately, leaving things alone, as imperfect as some may perceive it to be, is the best choice. Individuals making choices for themselves still is the best solution to running an economy.

Lastly, you will *never* have 0% unemployment without putting everyone in a prison and forcing them to work. Some people cannot work, will not work, or simply choose not to work at that particular moment.

In an economy with a fiat currency, where does the first dollar come from?

Is it already there, or does it have some creation event?

In a gold standard world, we know that the first dollar is already there in the form of gold, which can only move from hand to hand and from mine to hand, but with a fiat currency the currency is essentially an abstraction with no physical backing of any kind.  In such a system how does that first dollar come into existence?

I think about this a lot.  Harry Browne has a book called "99% of All You Need to Know About Money" that gives a pretty good basic overview of money.  I believe most of the text was excerpted from one of his earlier books, so it doesn't explain a true fiat currency (one with no gold link) but it does a pretty good job explaining what money is and how it came into existence.  It's a pretty quick read and is written in HB's usual easy-to-understand style.

I have read that as well, but I would say that it doesn't really answer the question of where the first dollar comes from in a fiat currency system.

When thinking about the beginnings of a fiat currency regime, you also must eliminate from consideration the option of the private sector simply avoiding the use of the fiat currency, since tax collection systems ensure that everyone will always need to obtain some of the fiat currency to pay the taxes that are necessary to stay out of jail.  This is not just an annoyance--it is a critical part of what makes the fiat currency work in the first place.  If there is no structural demand for the fiat currency, no one will want to use it because it has such a tendency to lose value over time.

[hoost]

In an economy with a fiat currency, where does the first dollar come from?

Is it already there, or does it have some creation event?

In a gold standard world, we know that the first dollar is already there in the form of gold, which can only move from hand to hand and from mine to hand, but with a fiat currency the currency is essentially an abstraction with no physical backing of any kind.  In such a system how does that first dollar come into existence?

I think about this a lot.  Harry Browne has a book called "99% of All You Need to Know About Money" that gives a pretty good basic overview of money.  I believe most of the text was excerpted from one of his earlier books, so it doesn't explain a true fiat currency (one with no gold link) but it does a pretty good job explaining what money is and how it came into existence.  It's a pretty quick read and is written in HB's usual easy-to-understand style.

I have read that as well, but I would say that it doesn't really answer the question of where the first dollar comes from in a fiat currency system.

When thinking about the beginnings of a fiat currency regime, you also must eliminate from consideration the option of the private sector simply avoiding the use of the fiat currency, since tax collection systems ensure that everyone will always need to obtain some of the fiat currency to pay the taxes that are necessary to stay out of jail.  This is not just an annoyance--it is a critical part of what makes the fiat currency work in the first place.  If there is no structural demand for the fiat currency, no one will want to use it because it has such a tendency to lose value over time.

Well, I think it might answer the question of where the first dollar comes from.  If we think of a fiat currency as being paper with no tie to any sort of commodity or anything else, then it seems likely to me that you would begin with a commodity based currency, then through a process of deception and devaluation wind up with a fiat currency.

The only way I could see that this wouldn't work is in some primitive society that was only based on barter, the government comes in and starts handing out pieces of paper to everyone and forces them to use it as money.  I can't imagine this happening, because if they're using barter, they probably have no concept of money or the need for it.

Can you imagine some sort of scenario where a fiat currency begins being used without some prior currency being in place?  There have been new fiat currencies issued based on old fiat currency (the euro), but I can't think of a situation where a fiat currency would come into place directly from barter.

[murphy_p_t]

I'm probably setting up a straw-man argument...but I've been wondering what the Mosler adherents will think about deficits when the current 30+ year bond bull market ends....and rates start rising....it seems Mosler's ideas (based on what I've learned here) seem much easier to accept when the US bond market has been in this one-way expansion (bubble?) for over a generation...

I think that people will discover that interest rates won't rise any time soon in light of the fact that the Fed has essentially committed to buying an unlimited number of treasuries to keep yields down.

I know its not what you're saying, but I can't help recalling Greenspan saying we had entered "a new paradigm" back in the late 90s...

As absurd as this sounds, that's the world we're living in.

Here is an interesting question: Does anyone think that yields on treasuries could rise if the Fed was committed to keeping them low?

Jim Rickards addressed the concern that if China tries to dump its Treasuries, the feds could/would likely shut down their accounts. This would be a drastic measure, in my view. I understand the Fed has most control over short term rates...not so much over 10-30 year bonds.

[MediumTex]

As absurd as this sounds, that's the world we're living in.

Here is an interesting question: Does anyone think that yields on treasuries could rise if the Fed was committed to keeping them low?

Jim Rickards addressed the concern that if China tries to dump its Treasuries, the feds could/would likely shut down their accounts. This would be a drastic measure, in my view. I understand the Fed has most control over short term rates...not so much over 10-30 year bonds.

Why would the Fed do something so draconian when the Fed could simply buy the treasuries back from China?

The whole "China dumps its treasuries" narrative is, to me, deeply flawed.  China's whole economy is based upon selling the U.S. more than we sell it and using the surplus to buy treasuries.  The arrangement that is currently in place is not an accident and if China dumped its treasuries it would basically be slitting its own throat economically.

[MediumTex]

Well, I think it might answer the question of where the first dollar comes from.  If we think of a fiat currency as being paper with no tie to any sort of commodity or anything else, then it seems likely to me that you would begin with a commodity based currency, then through a process of deception and devaluation wind up with a fiat currency.

The only way I could see that this wouldn't work is in some primitive society that was only based on barter, the government comes in and starts handing out pieces of paper to everyone and forces them to use it as money.  I can't imagine this happening, because if they're using barter, they probably have no concept of money or the need for it.

Can you imagine some sort of scenario where a fiat currency begins being used without some prior currency being in place?  There have been new fiat currencies issued based on old fiat currency (the euro), but I can't think of a situation where a fiat currency would come into place directly from barter.

Where did the first euro come from?

Did it grow from a euro seed that Helmut Kohl planted in his back yard?

[Gumby]

Where did the first euro come from?

Did it grow from a euro seed that Helmut Kohl planted in his back yard?

I could be wrong, but I believe the first Euros were exchanged into existence for Deutsche Marks. The Deutsche Mark ceased to be legal tender immediately upon the introduction of the euro. And the Deutsche Bundesbank has a standing guarantee that all German mark in cash form may be changed into euros indefinitely.

[MediumTex]

Where did the first euro come from?

Did it grow from a euro seed that Helmut Kohl planted in his back yard?

I could be wrong, but I believe the first Euros were exchanged into existence for Deutsche Marks. The Deutsche Mark ceased to be legal tender immediately upon the introduction of the euro. And the Deutsche Bundesbank has a standing guarantee that all German mark in cash form may be changed into euros indefinitely.

Right, but where did the government get the first euro to exchange for the existing Deutsche Marks?

Where did that first euro come from?  Was there a monetary "Big Bang" event that scattered euros all over western Europe?

[Gumby]

Where did the first euro come from?

Did it grow from a euro seed that Helmut Kohl planted in his back yard?

I could be wrong, but I believe the first Euros were exchanged into existence for Deutsche Marks. The Deutsche Mark ceased to be legal tender immediately upon the introduction of the euro. And the Deutsche Bundesbank has a standing guarantee that all German mark in cash form may be changed into euros indefinitely.

Right, but where did the government get the first euro to exchange for the existing Deutsche Marks?

Where did that first euro come from?  Was there a monetary "Big Bang" event that scattered euros all over western Europe?

It was just an asset swap operation. Various National Central Banks of member countries were given the authority (by the ECB) to print up billions of Euro notes and coins, and people stood in line to exchange their old currencies for Euros. Old cash was handed over and new cash was handed out.

That's the simplified explanation. In reality, some electronic transactions were recorded in Euros before the paper Euros were put into circulation.

The launch of the Euro is detailed here:

http://en.wikipedia.org/wiki/History_of_the_euro#Launch

It basically seems to have entailed a lot of parties and fireworks.

[MediumTex]

Various member countries were given the authority to print up billions of Euro notes and coins, and people stood in line to exchange their old currencies for Euros. Old cash was handed over and new cash was handed out.

That's what I'm getting at.

The government just printed up the euros out of thin air.

If the government hadn't printed them up in the first place, there wouldn't have been any way to get them into circulation.

What sort of governmental liability was triggered by the printing of these euros?  Presumably it was some sort of debt, right?

If Germany had a completely balanced budget and no government debt when the euro was issued, what would the books of the German government have looked like after the issuance of the euro?  Would it have had new debt?  Who would this debt have been owed to?