Chartalism

It turns out from the various comments to my recent banking post that Modern Monetary Theory is just Chartalism repackaged.
And what the heck is Chartalsim, you ask. It is, again, stating the blindingly obvious, from Wiki:
A prince, who should enact that a certain proportion of his taxes should be paid in a paper money of a certain kind, might thereby give a certain value to this paper money; even though the term of its final discharge and redemption should depend altogether on the will of the prince.

— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations
To give a folksy example, as a matter of fact, the wife and I don't give our children cash rewards for helping round the house and neither do we charge them rent.
But we could give them coloured plastic tokens for helping round the house ('government spending'). Those tokens are of course worthless UNLESS we demand that our children hand back a certain number of those tokens in rent each week and a certain number each mealtime ('paying tax') so that the budget balances. It is the 'taxing' which gives the tokens their value, not the spending.
So, for example, if one child has a shortfall because he or she hasn't helped round the house much, faced with eviction or going hungry, they would have to buy tokens from the other child, either for cash or in exchange for a favour (or just try stealing them). So the tokens clearly have value.
With modern currencies, society has organised itself so that the value of most transactions is measured in terms of the government-issued unit of currency for convenience.
This is not actually essential, we could do all our private trading in terms of dollars or bitcoins or gold or anything else, the government can (and does) collect taxes in sterling (by converting your dollar or bitcoin profits to its sterling equivalent and charging tax on that). The theory works much better if the government collects user charges like LVT rather than taxing income and profits, but that is a separate topic.
While this is all a bit counter-intuitive, it's not difficult to grasp. Think about it, if you go and pay your taxes in cash, the tax officer could chuck those bank notes straight on a bonfire without this affecting anything*; if the government needs more bank notes, it can just print up fresh ones at minimal cost. It's exactly the same with our hypothetical plastic tokens, my wife could collect X tokens each meal time and then put them through a shredder. Those tokens have served their purpose.
* The same as the Bank of England chucking all the UK government bonds it holds onto a bonfire; the government can't owe itself money. Despite what people say.