I don't believe the situation you outline is the case in reality. Dollars are not, in a sense, "debt" to the Fed. I don't owe the Fed a dollar because I have a

I don't believe the situation you outline is the case in reality. Dollars are not, in a sense, "debt" to the Fed. I don't owe the Fed a dollar because I have a dollar (you could make an argument that inflation actually makes this statement false, but that's a different argument outside the realm of Debt). A Treasury Bond is more the opposite; its a debt where the treasury is the borrower. The simple goal of T-Bonds is such that the government makes an assumption: the rate of GDP growth (and thus taxes) will outpace the rate at which they have to pay back their interest. This has almost always been the case, including today. > I don't see the sustainability of this system unless there is a "constantly increasing supply" of wealth There is a constantly increasing supply of wealth (lets call it by its real term: Productivity). Our population is increasing. And we're getting better at building technology. These are the two primary sources of increased productivity. When Productivity goes up, GDP goes up, and taxes go up. Debts get repaid. Maybe this isn't sustainable over the long term. But nothing is sustainable over the long term. That's not the point of an economy. If you like toilets, and iPhones, and $5 shirts from H&M, and HackerNews, then you have to respect that it works for us. And it'll probably work for our children too, because as long as we keep having children Productivity will increase. Here's another way to think about it: We are on this planet for 80 years. That's it. We need to engineer systems that maximize those 80 years for every interval of 80 years every person has. That's why we have Debt; otherwise our only Wealth would come from (1) inheritances, and (2) our intrinsic Productivity. That doesn't sound like a great system to me.