The book you read is a very good one but it gives you a partial answer. "The Panic of 1907" is an excellent book that details how what had started as a possible depression was reduced to a financial panic. But to truly understand the basis for our problems today one must understand the "Myths" of government and finances. Modern Monetary Theory was born out of a number of other theories or economic policies. Government and business have always been concerned about how to "govern" economic or business cycles, how to smooth the ups and downs so that interruption in minimal. Control was the key word. Policies or edicts that would regulate the imports or exports were sure to be the cure-all to economic stagnation and revive growth.

Well, what to do? Access to money or capital markets would help to control the economy, right? A little, yes, that was the school of Chicago's idea, control interest rates and the problem takes care of itself. In practice, not so much. The blue water school, meaning Harvard et el, were the strong followers of Marshall and Keynes. Government spending, especially deficit spending was the key to keeping the ship afloat and on an even keel. The Federal Reserve has been staffed by a majority of Keynesians, Chicago grads need not apply. By the way, the Fed is the largest employer of economists (PhDs). Economists may soon come to outnumber lawyers and we shall have to edit Henry V.

The various policies have come and gone such as "Hard Money" vs "Soft Money". Hard money is gold and silver, scarce metals and thus bring a premium in the market. This is the money supply problem since gold and silver do not appear out of thin air and must be mined by one method or another, the relative price for these metals and by extension their coins, depends on the supply at the time of demand. If one is a creditor one wants hard money because it commands the higher premium when the debt is being repaid. If one is a borrower, one wants to repay in soft money (paper currency) because it is cheaper to acquire. Our state and national political parties have often been organized around hard or soft money. The other problem was that banks were subject only to the standards of their states and there was little interstate banking to regulate. The common man did not trust banks and bankers for the very reason was that if the bank where he put his savings went bankrupt he lost his savings and the banker lost his capital. Money supply was a serious problem and often the local banks and stores created their own script to act as money. The MMT people have conveniently forgot about history and made the assumption that the government (national) has a monopoly on the creation of money.

Ah, the creation of money, another myth. Too many of us think of the rich as Scrooge McDuck where piles of cash lie around the mansion doing nothing. So it must be that the Federal Reserve sits on wads and pallets of Federal Reserve notes (look in your wallet and pull out that one dollar bill, what does it say on the top), an IOU, by the way, redeemable at the Fed for another IOU. No, the government monopoly died when electronic accounting came into being. Actually, it started to die with the creation of the Federal Reserve, it just took a while for the bankers to understand their real power. Still we have the monetary myth that credit isn;t the same as real money, currency in the vault. I have had this argument with some who say they are economists and that is the standard answer. People, take that piece of plastic out of you purse or wallet. What is it? A credit card (as opposed, oddly enough, to a debit card, separate account) and it spends just as easily as the cash you used to keep in your pocket. For all those advertisements for credit services, improve your credit rating, what are they talking about? Your ability to borrow money, to incur debt. Your ability to buy goods and services you cannot pay for today and agree to pay for tomorrow. How many of us have the cash in the bank to pay for a $250,000 house today? Can I see a show of hands? Okay, but then you are granted a 30 year mortgage and you will pay, including interest, almost three times that purchase price when you have paid the mortgage in full, depending on interest rate. The federal government did not print more money for that original purchase, the banks did, they created the "money" in the form of credit and debt. Then they sold your loan at a discount to an investor (bank, private individual, syndicate, whatever- a transaction of credit).

I can see that I will not be posting this morning. So the big question is, what happens to all these debts that float about the world, and they do go world wide. Every nation has a central bank which it owns. The European Union has a central bank that governs the financial affairs of the EU and its member states, regulates, to some extent commercial and private banks, and authorizes the printing of currency. These central banks exist to do two things, keep the banking sector stable and buy government debt. These central banks set the interest rates private and commercial banks borrow money from the central banks and thus influence the interest rates the private and commercial banks charge their customers and pay their savers. Decades ago several books were written about the leverage that financial institution used in making money and profits. So many businesses are involved. Insurance companies take in the premium payments and must invest so as to meet the expected policy payouts. Retirement funds take in the worker retirement contributions and invest to increast their assets for the promised pension payouts. And so it goes. The credit industry is fueled by debt. Interest rates are the brakes or the accelerators in this system.

So why has government debt all over the world, for the most part ( there are countries who have resisted the temptation) risen so steeply in this twenty first century. The expansion of credit by the lowering of interest rates. In 1984 this country saw interest top over 16%. This century we have seen almost zero interest rates. If one were to borrow a million dollars at 5%, how much is that cost on straight interest for one year, fifty thousand? But if interest rates drop to one percent, you could borrow five million for that same cost. Now what happens if interest rates start to rise? Your cost of borrowing every year start to rise. We are in the time of soft money.

The iron law of debt is that it is always paid. If the person who borrows that money or credit can't repay it, the the one who let the money or credit will. The amount of debt in the world is estimated to be in the nature 300 trillion or more, the estimates seem to my mind a bit too low. On the other hand, who would try to reposes a nation state of sufficient size if it defaulted on its debts?

for civil conversations.

I wonder if we would have any "large scale recessions, depressions," if government didn't manipulate our money in the first place?

As I understand it, recessions and depressions are basically "market corrections" that occur when government manipulation drives the economy to be too far detached from reality.

Too big to fail...who can forget that misleading statement. Someone posted up that there was a bill that would both enforce political term limits and abolish the Federal Reserve. The first is a Ted Cruz proposed bill, the second, yah. And if you believe that, a monkey will jump out your ass!

It sounds like your friend is filling out a job application for a position in a Ponzi scheme
The Fed is the biggest Ponzi scheme in creation . Bernie Madoff would have been a mid level flunky .