From the macroeconomic perspective, since the US dollar had reserve status and unlimited foreign demand, it just becomes more efficient to print and export dollar bills and import real goods than to actually exert physical labor to produce goods to export and balance trade. Once this realization sets in, the optimal game theory outcome is to reorganize the economy around this structure of print-and-export-dollars debt-based system. Debt only becomes a problem when other people don’t want to hold it anymore.
That's true. The US dollar reserve status is a contingent factor however.
How do we maintain it? An obvious factor is our military capacity. That means defense spending. Under a capitalist system that also requires a competitive commercial defense sector and also a strong economy capable of sustaining such a sector via tax revenue.
Most tax revenue comes from individuals. In an era of mobile capital, corporate taxation is sub-optimal. So the economy's health is linked to the prosperity of individuals, in aggregate. Prosperity can come from competition, but the most durable forms of prosperity are tied to increasing productivity.
Continuing on this first principles trajectory should lead to a stable structure. It's not one that is dominated by "print-and-export-dollars"-style industries.
