Of course the money needs a reason to circulate. If Larry had done work for Moe and thus forward, then these debts could be valid and payment could be made. The error would be to believe that it would circulate without a reason.
I beg to differ, a little. More important is someone creating capital or making a capital investment. Turning raw resources into something of greater value, that is making something is probably more important. If the bank of Curly borrows from the bank of Moe who borrows from the bank of Larry who borrows from the bank of Curly and on and on that is a false economy doomed to failure. Something needs to be created in excess of the value of the investment. Yes, that might be work but you are better off if it is something substantial.
My point is, many people, including Krugman, if he is a people, claim that spending money and not saving is more important. But in a normal economy, not necessarily the one we have, that saved money is invested via loans and bond offerings. The Stooges just circulate the funds, which is what Keynesians advocate.
Not much reason to move around these days, apparently...
https://research.stlouisfed.org/fred2/series/M2V
That little stunt where the debt stayed fixed for over 6 months then blew up $349b once the budget deal was announced, Jack Lew ought to be in jail getting married to the guy on the cell block with the most cigarettes over that one.