The way money is 'printed', is that the sovereign buys longer term debt from its banks with demand debt currency. The sovereign can only do that so long as there is a private market for its long term debt. The CB books a cash liabilty on its balance sheet then tranfers the cash liabilty to the Banks in exchange for longer term debt assets of an equal amount. The banks swap the longer term debt assets on their balance sheet for the cash asset from the CB. Rather than printing a digital ledger entry is made at the accounts of the CB and in Banks accounts at the CB where assets are swapped. Income shifts from the Banks to the CB and the Banks must place the new cash into investments. Where there is no demand for debt and the CB is buying all the longer term gov't debt the banks are faced with excess reserves, which of course they leave on deposit at the CB. So, without private loan demand the money printing is simply a shift of longer interest bearing assets from the Banks to the CB in exchange for lower interest or no interest bearing demand debt that remains on deposit with the CB. The change then is that banks loose earnings and the CB increases earnings. No money supply is expanded in the real economy as the cash never leaves the governmetn banking system...becasue there is no private loan demand.
Trefoil, as for history, the U.S. created the Marshall plan after we saw China lost to the Communists. We pledged $13B to the reconstruction of Europe. Most people don't learn much beyond that. There are corollary facts; the details. As a condition for Marshall plan funding the recipient nation had to forego any IMF stabilization funding and they had to commit to a fixed exchange of their currency with the dollar. If they varied from the fixed exchange agreement they would be cut loose with no recourse to IMF help. Rather then the misapprehended superficial historical understanding of a 'capital infulsion,' the Marshall Plan actually enforced a currency union. Rather than 'printing' money it created currecy stabilization and fixed exchange rates for trade with the dollar. Germany grew at 8% per year to 1960; France grew at 6%, Italy near that and UK with its welfare policies and reticence toward Bretton Woods and U.S ascendency had the slowest growth at 2.6%. Nice Churchill quote, but they were not listening to him in the UK.
Does come back to what you spend the money on. In the end if there are no private lenders you cannot demand or create the money by 'printing.' If you try to print money with no private backing of your sovereign debt then you don't debase you currency in an inflation you destroy it in a couple of years. The difference between inflation and currency collapse is the ability to attract outside investment. That is why Greece can not just walk away from the Euro and devalue to a drachma at 50% hair cut, they still will not be able attract private or foreign investment so the Drachma will quickly collapse to Zero. If the EU tries address the crises with measures to nationalize the Spanish banks or paper bad Greek debt with more 'cross dress' debt then they just grab a tar baby, in the way that Ireland did.
Inevitably, when you do not have the income to pay your debts you simply do not pay your debts. The creditors have to write them off and you have to proceed without access to credit.
