Curiously, the Real Academia de la Lengua Española (Royal Academy of the Spanish Language) says only "origin is under discussion". The Spanish researchers I've seen agree with the theory of the deformation of the word "griego" meaning "a person who speaks an unintelligible language", applied mainly to Irish people in Spain, and the word appears in 1787 in the Dictionary mentioned by Dicho (which incidentally means "already told" in Spanish). It's interesting that in Argentina, the term has been used to name the Europeans in general, much before its use for Americans. It is still derogatory, but could be used as a friendly treatment, unless accompanied by the suffix "de mierda", which you should never accept. :))))

Ref.http://www.levieuxcoq.org/G.html

Un abrazo - Andrés in the troubled Buenos Aires