“When people ask what is backing the USD, they are asking the wrong question. People are looking for collateral to back the currency when the currency is the collateral.”

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This is spot-on.   I really like this post.  Anything that can be freely exchanged for goods, services and financial assets, like currency, is the ultimate collateral.  And US bonds, even if  real returns are slightly below zero, is a good “form” to hold that currency in…because it better protects against inflation than cash does.

I think about value a lot…where things obtain their value from…
- Milk because it gives me energy
- House because it gives me shelter
- Clothes because they keep me warm
- Currency because I can exchange it for these things
- Currency denominated debt because it gives me a slight return to hold the currency in…
- Plus the currency is the only thing I can use to pay off the government (taxes), so they don't put me in prison or take things from me, good reasons to hold that currency :)

Turning HBD into collateral is a good concept that should be explored.  Questions like this come to mind:
- Why should I hold HBD?
- Can I exchange it directly for goods, services and financial assets?
- Will there be penalties if I do not hold HBD?  
- Are there benefits, like you said, HPD denominated debt with an interest rate that’s highly liquid and exchanged freely globally? 
- What's the better option?  Or the next best alternative?  And why wouldn't I hold that collateral instead?

This is just a stream of consciousness I'm spouting off, but I think your post is thought provoking @taskmaster4450.