Greece 2015+...

[dimreepr]

And yet your solution is to borrow and spend more.

 

 

It’s a historically validated method to stimulate growth and therefore viable now.

[Delbert]

So, instead of using clear economics, your argument relies on appeals to moral hazard and the slippery slope fallacy. While I understand why you feel this way, it too has nothing to do with the economics of the current situation, which are clear.

Morals or moral hazard! I never mentioned morals at all. It's more to do with ending up with destitution and chaos - possibly even anarchy. Morals don't enter the equation.

 

And nothing to do with economics!! Now I've heard it all.

 

"Quite happy" to do it and recognizing that it needs to be done are two entirely different concepts. Of course I'd want to be repaid if I lent someone money. That's not the point, though, and this has been explained to you before.

Different concepts!! Now we're into gobbledygook with concepts. It's money, if you haven't spotted the point. You know, that stuff one has to work hard for, and pay taxes for the privilege. And what might happen to those taxes you've worked hard to pay? Your government might on this occasion, after writing-off loans already made, give some of this hard earned as further loans - which, in the fullness of time, may also never get repaid.

 

With luck, any leaders that undertake a policy of writing-off and lending more feel the power of democracy when seeking a plebiscite when the people speak at the next election.

 

It's got nothing to do with politic speak like 'concepts' and 'morals'.

[dimreepr]

Morals or moral hazard! I never mentioned morals at all. It's more to do with ending up with destitution and chaos - possibly even anarchy. Morals don't enter the equation.

 

And nothing to do with economics!! Now I've heard it all.

 

Different concepts!! Now we're into gobbledygook with concepts. It's money, if you haven't spotted the point. You know, that stuff one has to work hard for, and pay taxes for the privilege. And what might happen to those taxes you've worked hard to pay? Your government might on this occasion, after writing-off loans already made, give some of this hard earned as further loans - which, in the fullness of time, may also never get repaid.

 

With luck, any leaders that undertake a policy of writing-off and lending more feel the power of democracy when seeking a plebiscite when the people speak at the next election.

 

It's got nothing to do with politic speak like 'concepts' and 'morals'.

 

 

Your understanding of this subject borders on the laughable; I’m sure iNow will highlight the reasons.

[Roamer]

It doesn't matter whether one speaks from an "economic" perspective or a "moral" perspective.

In both cases, generally, debts just have to be paid, under the conditions agreed upon.

In both cases, if the debt is too high/unpayable, the lenders will need to take some responsibility as well.

In both cases, if a debt doesn't get paid this reflects bad on the borrower, and they will have a hard time borrowing again(as they should)

 

@Delbert, if you realy have to compare institutional loans with private loans,

have you considered comparing with a private bank loaning 500k to someone who only makes 25k/annually and loses his job a few years later?

In the civilised world, even private banks have some responsibility as well.
(and generally institutional banks have a higher responsibility then private banks.)

[iNow]

And yet your solution is to borrow and spend more.

This strongly implies that you're failing to comprehend the underlying tenets of my position and the core points I've been making. The above is not an accurate summary. That said, I will acknowledge that further cuts in spending will merely prolong and amplify these issues and should generally be avoided.

 

Different concepts!! Now we're into gobbledygook with concepts.

Yes, being happy to forgive a debt and recognizing debt forgiveness as the most rational choice available to heal the broader system in these specific current circumstances are, in fact, different concepts.

 

.

Edited July 9, 2015 by iNow

[Delbert]

It doesn't matter whether one speaks from an "economic" perspective or a "moral" perspective.

In both cases, generally, debts just have to be paid, under the conditions agreed upon.

Absolutely. Although I'd delete the word 'moral'.

 

have you considered comparing with a private bank loaning 500k to someone who only makes 25k/annually and loses his job a few years later?

Don't think I've made any comments about lenders thus far. But since you've introduced it I would agree that lending too much is dangerous and stupid which, of course, leads to the same problems as over borrowing.

 

Yes, being happy to forgive a debt and recognizing debt forgiveness as the most rational choice available to heal the broader system in these specific current circumstances are, in fact, different concepts..

You haven't mentioned that following your forgiveness and happy feeling, you've now got to lend them another shedload of money to keep their wheels rotating! Which, I would place money on, they won't be able to repay either. So doubtlessly you'll have another opportunity to offer forgiveness and experience a happy feeling!

 

It's nothing to do with forgiving, and indeed, being happy about it. It's the consequences. Because as I've said above and just mentioning merely one aspect, what do you say to others that have taken the medicine and done the right thing to correct their economy?

 

And then there's the danger of what view other countries playing by the rules and keeping their head above water might make of it all. And as I've said before, especially their working force whose taxes have probably be flushed down the toilet to pay for it all? What they will do, I suggest, is exercise the power of democracy. Indeed and coincidentally, just such controlling force was mentioned during a radio discussion program just a few minutes ago, which apparently is placing a controlling hand on the leaders.

 

I have every confidence in the power of democracy. Democracy has no truck with morals, forgiveness, concepts and all the other mumbo jumbo. As I believe someone once said: it's the economy, stupid. Or how I would express it: it's the money in the voters' pocket, stupid.

Edited July 9, 2015 by Delbert

[waitforufo]

This strongly implies that you're failing to comprehend the underlying tenets of my position and the core points I've been making. The above is not an accurate summary. That said, I will acknowledge that further cuts in spending will merely prolong and amplify these issues and should generally be avoided.

 

Yes, being happy to forgive a debt and recognizing debt forgiveness as the most rational choice available to heal the broader system in these specific current circumstances are, in fact, different concepts.

 

.

Keynesian economics is supposed to work by causing economic expansion through deficit spending. The deficit spending increases national debt but if the economy grows the debt to GDP ratio should stay the same or even shrinks making the larger national debt number meaningless. If the deficit spending does not grow the economy the debt to GDP ratio grows and the economy collapses. Your solution to this problem is just forgive the debt and try deficit spending again. I think Einstein would call that insane.

 

I'm sure the leaders of healthy economies would rather stop lending to Greece and grow there own economies instead.

Edited July 9, 2015 by waitforufo

[iNow]

Given that deficit spending is not the root cause of current issues, your conclusion seems ill-founded and even nonsequitur.

Edited July 9, 2015 by iNow

[iNow]

Keynesian economics is supposed to work by causing economic expansion through deficit spending.

Well, actually:

 

Keynesian economics is the view that in the short run, especially during recessions, economic output is strongly influenced by aggregate demand (total spending in the economy). In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy; instead, it is influenced by a host of factors and sometimes behaves erratically, affecting production, employment, and inflation.

<snip>

Keynesian economists often argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, in particular, monetary policy actions by the central bank and fiscal policy actions by the government, in order to stabilize output over the business cycle. Keynesian economics advocates a mixed economy predominantly private sector, but with a role for government intervention during recessions.

 

I'm sure the leaders of healthy economies would rather stop lending to Greece and grow there own economies instead.

Sort of like the other 49 states felt when we had to bail out Texas during the savings and loan crisis?

 

http://krugman.blogs.nytimes.com/2012/06/17/what-a-real-external-bank-bailout-looks-like/

The cleanup from that crisis cost [u.S.] taxpayers about $125 billion around 60 percent in Texas (pdf) $75 billion in outright transfer. Texas [annual] GDP was about $300 billion in 1987 giving [it] 25 percent of its [annual] GDP And in the US it wasnt even treated as an interstate political issue. If Texas had been an independent country in 1986-87 it would have experienced a huge financial and fiscal crisis

My point?

 

http://equitablegrowth.org/2015/07/09/needed-large-greek-devaluation-large-scale-transfers-greece/

There is no fundamental real flaw in the real economy that is our societal division of labor and our system of production, distribution, and consumption that requires that a quarter of Greeks eager to work at the prevailing wage be unemployed for a decade. It is only a flaw in the monetary system we have collectively constructed to help manage this real economy that is trying to enforce that result. And if one rules out other wayscough, cough, devaluationand finds that the only way to avoid that result is by truly massive fiscal transfers to Greece, than it is the obligation and duty of the ECB, the EU, and the IMF to make such transfers. As the U.S. government did to Texas in 1991.

Or, perhaps more on the nose:

 

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/06/thomas-piketty-accuses-germany-of-forgetting-history-as-it-lectures-greece/

In recounting the history of debt forgiveness in the interview, Piketty is referring to the period after World War II when Germany, or more specifically West Germany, was a defeated nation struggling to find its role in the world.

 

When a new government was created to replace the German Reich, it inherited a mess. The West Germans still owed reparations from World War I. They needed epic loans to fund reconstruction. By 1953, West Germanys debt was about $7 billion, or $62 billion in today's dollars. Bonn owed money to the U.S. and much of Europe including Spain, France, and yes, Greece.

 

Then, those countries gathered in London in 1953 for a debt summit. Archived accounts suggest that the creditor nations seemed to believe they were helping to serve the broader goal of a stable Europe by giving West Germany far easier terms. The formal agreement that came from the summit said debts were being partially forgiven in order to help Germany make a contribution to the development of a prosperous community of nations.

 

The creditor nations waved goodbye to roughly 50 percent of what they were owed.

<snip>

Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of todays Greece, and in fact had been far more indebted, he said. The first lesson that we can take from the history of government debt is that we are not facing a brand new problem. There have been many ways to repay debts, and not just one, which is what Berlin and Paris would have the Greeks believe.

[MigL]

Well, I'm convinced.

 

iNow, can I 'borrow' $50,000 ?

[DimaMazin]

 

Which shows the hypocrisy and, frankly, stupidity of the Germans. They know a pathway that works to resolve such a crisis, and they are insisting on a different method. It's not just a matter of ignoring history, it's ignoring their own history.

Wrong. Only really changed political course can cause to write-off a debt. It is when Waitforufo's brother completely doesn't drink alcohol and has helpful deal.

Edited July 10, 2015 by DimaMazin

[Delbert]

Given that deficit spending is not the root cause of current issues, your conclusion seems ill-founded and even nonsequitur.

It's not! Now that's an interesting conclusion. If you're trying somehow to separate spending shedloads with the need for shedloads I say you're attempting a magic trick. Brilliant if one could pull-off such an illusion.

 

In contrast to your view, the problem is spending shedloads of borrowed money. In today's world we do whatever is necessary to obtain money. Some of us need to work hard to obtain it (and have to pay taxes for the privilege), but if one takes advantage of cheap borrowed money on tap, work probably isn't such a necessity - and no, I'm not for one moment suggesting it's the fault of the lenders. Anyway, I'm sure I've no need to continue with the consequences of work not being such a necessity has been written and spoken about since the beginning of time - but humans being human, we have to relearn these things every now and again.

[waitforufo]

Well, I'm convinced.

 

iNow, can I 'borrow' $50,000 ?

Go for it iNow. I'm sure he's good for it.

[iNow]

It's not! Now that's an interesting conclusion. If you're trying somehow to separate spending shedloads with the need for shedloads I say you're attempting a magic trick. Brilliant if one could pull-off such an illusion.

 

In contrast to your view, the problem is spending shedloads of borrowed money.

Or, perhaps we could listen to the people who actually have done the analysis on this situation and have some sense of what's really happening instead of folks like you who seem content to argue exclusively via excessive exclamation points and baseless opinion.

 

http://www.bruegel.org/nc/blog/detail/article/1615-the-imfs-big-greek-mistake/

 

Virtually everyone now agrees that pushing Greece to pay its private creditors was a bad idea. The required fiscal austerity was simply too great, causing the economy to collapse. The IMF acknowledged the error in a 2013 report on Greece. In a recent staff paper, the fund said that when a crisis threatens to spread, it should seek a collective global solution rather than forcing the distressed economy to bear the entire burden. The IMFs chief economist, Olivier Blanchard, has warned that more austerity will crush growth.

http://mainlymacro.blogspot.co.uk/2015/07/greece-and-political-capture-of-imf.html

To achieve a primary surplus of 1% of GDP to transfer to the Troika, the Greek government needs to undertake austerity that will reduce Greek GDP by 3% (assuming a multiplier of 1.5, and a tax/transfer loss from lower GDP of a third). That reduction in GDP is a social loss (the loss to the Greek economy is 3% plus the 1% transfer) - at best pure waste

http://www.thenation.com/article/austerity-has-failed-an-open-letter-from-thomas-piketty-to-angela-merkel/

Five leading economists warn the German chancellor, History will remember you for your actions this week.

 

By Thomas Piketty , Jeffrey Sachs , Heiner Flassbeck , Dani Rodrik andSimon Wren-Lewis JULY 7, 2015

<snip>

The Greeks have complied with much of German Chancellor Angela Merkels call for austeritycut salaries, cut government spending, slashed pensions, privatized and deregulated, and raised taxes. But in recent years the series of so-called adjustment programs inflicted on the likes of Greece has served only to make a Great Depression the likes of which have been unseen in Europe since 1929-1933. The medicine prescribed by the German Finance Ministry and Brussels has bled the patient, not cured the disease.

<snip>

Now is the time for a humane rethink of the punitive and failed program of austerity of recent years and to agree to a major reduction of Greeces debts in conjunction with much needed reforms in Greece.

http://www.nytimes.com/2015/06/29/opinion/paul-krugman-greece-over-the-brink.html

To understand why I say this, you need to realize that most not all, but most of what youve heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes. Government employment has fallen more than 25 percent, and pensions (which were indeed much too generous) have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus.

 

So why didnt this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it.

 

And this collapse, in turn, had a lot to do with the euro, which trapped Greece in an economic straitjacket.

 

...humans being human, we have to relearn these things every now and again.

Yep. My irony meter just broke.

 

 

http://www.cepr.net/blogs/cepr-blog/austerity-and-the-employment-rate

 

Many economists argued against this drive towards austerity at the time. They noted and rigorously explained the fallacious logic in the idea that deficit reduction could be expansionary. They also pointed out how fiscal policy had already saved the economy from a second depression and that more stimulus would likely be necessary. However, now we have more than three years of data, so we no longer have to speculate. A simple picture can be worth a thousand words (or in this case, billions).

 

In order to understand this picture, it is important to contextualize the position of each country with an understanding of their economic situation in 2010 and the various predictions economists and policy makers offered after the Great Recession. First, many countries were running relatively large structural balance deficits and had high unemployment in 2010. Therefore, if the pain caucus predictions were correct, we would expect to see a strong positive correlation between changes in the structural balance and employment rate. In this worldview, as countries like Greece and Spain cut their budgets in order to qualify for international support, increased confidence in financial markets would return them to full employment quickly.

 

Clearly, the data show the opposite trend. This image very crisply suggests what Keynesians have been arguing in more nuanced ways for four years, namely that many countries cut fiscal spending too soon, prolonging the negative impacts of the Great Recession for workers.

Edited July 10, 2015 by iNow

[Delbert]

Or, perhaps we could listen to the people who actually have done the analysis on this situation and have some sense of what's really happening instead of folks like you who seem content to argue exclusively via excessive exclamation points and baseless opinion.

It seems we have a different approach. Your approach seems to be to forgive them and write-off the debt and all will be well. Oh, sorry, also give them some more money.

 

Whereas my approach is to perhaps accept we've been stupid enough to acquiesce to numerous requests for regular amounts of money and haircuts on previous loans over the years (about ten years, I believe), which apparently they've now spent. And upon now asking a further haircut and some more money, my view is okay we probably won't get the money back until hell freezes over, so cancelation might - but only might - be in order (but I'd reserve judgement on that). And certainly following accusations of blackmail for not coughing up without question, I would not lend them any more money.

 

What will happen? Probably a fudge with a 'new' offer of conditions depending upon a haircut (haircut seems the new word) and a further loan. This may result in a couple of possible outcomes.

 

1) The Greek PM may have to resign because he has gone against the NO outcome of the referendum. An election is called which results in a far-left PM materialising who cancels the agreement! You know, like the current one did after he was elected.

2) Once haircuts and new loans start, the conditions are never implemented or subsequently cancelled if they were because of the effect on the people.

Edited July 10, 2015 by Delbert

[iNow]

A helpful view below. Notice what happened when austerity measures were implemented?

 

http://www.ritholtz.com/blog/2015/07/the-unfolding-greek-crisis/

[overtone]

It's like this: intelligent people realized long ago that giving moneylenders a blank check on people's lives was a bad idea. In the early days of capitalism, debts were often inherited - creditors could claim the wages and property of the debtor's children, and jail them if they did not pay. A bad loan could mean a lifetime of indentured servitude. Given the ordinary slings and arrows of outrageous fortune, a well-financed and clever moneylender was likely to end up owning most of a town and the service of much of its population, more or less permanently - the same way the house wins in Vegas.

 

This obvious problem with allowing interest even, let alone compound interest, on loaned money, was one reason it was for centuries forbidden by most of the world's major religions - including all the major branches of Christianity, the major religions of the American and Asia continents , and most anywhere else with written laws. Moneylending lent itself to predation too easily and too temptingly.

 

As the consequences of such leverage became clear in the new world of industrial capitalism, and as democracy spread, and as new continents were discovered for the unlucky to flee to, bankruptcy and limited liability incorporation were invented - the lenders, as sound capitalist theory demanded, earned their interest by taking risk with more limited recourse to physical force. They could no longer use caculated predatory lending to obtain ownership of vast wealth and lifetimes of servitude for cheap.

 

So the moneylenders had a problem: how to get leverage against the large amount of wealth produced by civilizations that had been placed beyond their reach by these democratically enforced curbs on their use of force, enslavement, etc.

 

And we see, with Greece now and dozens of countries before Greece, one of their solutions: there are no bankruptcy protections for countries. Corrupt a few government officials, make a few calculated loans, and the service of an entire country's economic base and taxation powers can be obtained.

Edited July 10, 2015 by overtone

[waitforufo]

A helpful view below. Notice what happened when austerity measures were implemented?

 

http://www.ritholtz.com/blog/2015/07/the-unfolding-greek-crisis/

 

So what you are telling us is that the Greek economy will flourish with an endless supply of free money. Gosh, you should apply for the Nobel prize in economics.

Edited July 10, 2015 by waitforufo

[Delbert]

 

So what you are telling us is that the Greek economy will flourish with an endless supply of free money. Gosh, you should apply for the Nobel prize in economics.

Yes, I'm rethinking what I've been doing all these years. You know, working (hard I like to think), paying taxes and bills, repaying with interest any money I borrowed, living within my means and generally keeping a tight ship. Clearly, I would've been far better off by borrowing shedloads which I couldn't repay.

[waitforufo]

Yes, I'm rethinking what I've been doing all these years. You know, working (hard I like to think), paying taxes and bills, repaying with interest any money I borrowed, living within my means and generally keeping a tight ship. Clearly, I would've been far better off by borrowing shedloads which I couldn't repay.

Think how much better the economy would be if everyone was stimulating the economy like that? All we need to do is declare an international debt forgiveness day. It that doesn't produce utopia, we can make saving and investing a crime.

 

Edited July 11, 2015 by waitforufo

[iNow]

It's encouraging to see that you both have little more than snark, prepubescent giggles, and continued false comparisons of national economies to personal family budgets in support of your disagreement with the robust support I've offered in favor of my position throughout the thread. It brings confidence that I'm on the correct track with my assertions and conclusions.

 

Now, don't get me wrong. I'm open to valid counter claims and alternative analyses. I'm simply highlighting the fact that neither have been even remotely put forth.

[Delbert]

It's encouraging to see that you both have little more than snark, prepubescent giggles, and continued false comparisons of national economies to personal family budgets in support of your disagreement with the robust support I've offered in favor of my position throughout the thread. It brings confidence that I'm on the correct track with my assertions and conclusions.

Yes, that's the fundamental difference. We of a particular persuasion have this strange approach that money has to be earned, agreements have to be adhered to and money borrowed has to be repaid. Whereas those of the contradictory persuasion, seem to take the view that money doesn't have to earned, agreements unhonoured (the current situation is because they failed to honour one previously made) and money borrowed left unpaid and should be written-off.

 

If that makes we of a particular persuasion prepubescent, giggly and a falsifier of comparisons of something so elevated and inviolate as national economies where elementary arithmetic plainly doesn't apply, I for one am perfectly satisfied to be prepubescent and giggly. What's more, if anyone of the contradictory persuasion came to me for work in or any business association whatsoever, I would ask them to be kind enough to turn around and close the door as they leave - indeed, I would avoid them like the plague.

 

But to the business at hand. News reports I've heard seem to suggest that the new proposals put forward by Greece are more draconian than those of the NO outcome of the referendum! And if I heard the reporter correctly, there's concern they may not keep to the proposals. Do they mean like the last time?

 

Like outcome 2 of my reply #65 above, mayhap?

[overtone]

 

 

We of a particular persuasion have this strange approach that money has to be earned, agreements have to be adhered to and money borrowed has to be repaid. Whereas those of the contradictory persuasion, seem to take the view that money doesn't have to earned, agreements unhonoured (the current situation is because they failed to honour one previously made) and money borrowed left unpaid and should be written-off.

If you are so wedded to your continual confusion of government budgets funded by taxation and personal budgets funded by labor or investment of capital,

 

why are you so opposed to extending to these governments the ordinary protections of bankruptcy enjoyed by persons in all industrial economies?

 

Are they like family budgets, or aren't they?

[michel123456]

I believe we are looking at a tragedy.
It is not a question of economics, it never was. It has become a personal issue

Mr Schauble have seen this arrogant Varoufakis coming with all the medias around. Varoufakis is good-looking, he is cool, women love him. He is fresh coming and he has a success that Schauble from his weelchair has never received. He is a lawyer, he doesn't like the lecture from leading Economist Professor Varoufakis. As Varoufakis said, not any one of the Eurogroup Minister would have passed his exams.
Furthermore Mr Schauble is close to Angela Merkel but he never received this glance of teenager that Angela gave to Prime Minister Tsipras. Another good-looking fresh-coming who attracts the medias.
Mr Schauble is jealous, he has gone mad.
Even Mr Draghi understands that. Economists and bankers try to tell Mr Schauble to save billions of Euros and Lawyer Schauble hears nothing. I believe even Mr Dijselbloem must understand that something goes wrong.

This comment I took today from the news (Google translate, couldn't find the original info in English). http://www.skai.gr/news/politics/article/285924/diktikos-apenadi-sto-shedio-soible-o-karsten-snaider/

Contrary to the positions Schaeuble reportedly is Mr Karsten Schneider, vice president of NB the Social Democrats (SPD), through posts in twitter.
Karsten Schneider commenting on a report in the Frankfurter Allgemeine Sinntagszeitung which spoke of the document leakage of the German Finance Ministry in setting out potential exit of Greece from the euro zone for at least five years, he said: "Too many lawyers and too few economists at the Federal Ministry of Finance. It is tragic that 'you step your foot down and you want to always get it right. "
In the next post added the consequences of a potential Grexit that: "A temporary Grexit is not a serious proposal, it is a threat to the rest of the Eurozone", while a little earlier he had written: "There will be agreement within euros. Obviously the federal Treasury must compensate for his role on the sidelines. "

My comment is:
On the sidelines?? Mr Schauble will never accept this idea. He believes that he is right, everyone else is wrong. There is a name for that kind of behaviour.

 

------------------------

(edit)

IOW, I think with Mr Schauble there are little chances for Greece.

Edited July 12, 2015 by michel123456

[Endy0816]

Yes, that's the fundamental difference. We of a particular persuasion have this strange approach that money has to be earned, agreements have to be adhered to and money borrowed has to be repaid. Whereas those of the contradictory persuasion, seem to take the view that money doesn't have to earned, agreements unhonoured (the current situation is because they failed to honour one previously made) and money borrowed left unpaid and should be written-off.

 

If that makes we of a particular persuasion prepubescent, giggly and a falsifier of comparisons of something so elevated and inviolate as national economies where elementary arithmetic plainly doesn't apply, I for one am perfectly satisfied to be prepubescent and giggly. What's more, if anyone of the contradictory persuasion came to me for work in or any business association whatsoever, I would ask them to be kind enough to turn around and close the door as they leave - indeed, I would avoid them like the plague.

 

But to the business at hand. News reports I've heard seem to suggest that the new proposals put forward by Greece are more draconian than those of the NO outcome of the referendum! And if I heard the reporter correctly, there's concern they may not keep to the proposals. Do they mean like the last time?

 

Like outcome 2 of my reply #65 above, mayhap?

 

People earn money. Governments alter the quantity/value of money.

 

Taxes reduce the quantity in circulation. Inflation reduces the value of money in circulation.

 

Governments would regularly reduce their debts by printing money. This is what countries on the Euro can't do alone however.