I completely agree that in the long term this is completely faulty and just helps to exacerbate the underlying causes of economic crisis. But our government (typically) does not act in long-term interests. We as a people do not hold our politicians accountable.
I'm pretty sure its treasury bonds that are "Backed by the full faith and credit of the United States". Dollars are backed essentially by what you can buy with them.
This is why each note has “Backed by the full faith and credit of the United States” printed on it.
https://en.m.wikipedia.org/wiki/History_of_the_United_States...
https://www.reference.com/business-finance/backs-up-currency...
No they don't. I just checked three different bills in my pocket (a $1, a $10 and a $100) and none of them say this. They say "This note is legal tender for all debts public and private" but there is absolutely no reference to "the full faith and credit of the united states"