There's a chicken-and-egg thing in there. All economies require constant infusions of new money to keep growing. If the supply of new money does not keep pace with an increasing supply of good and services (i.e. economic growth), then we have "too little money chasing too many goods." When happens, we have deflation -- the price of things, in money, starts to drop. What sold for $5 yesterday sells for $4 today. People pick up on this very rapidly... what they do is conclude, "Well then, it'll be $3 tomorrow. I'll wait." Sure enough, it is $3 tomorrow, because by holding back, the person has effectively reduced the supply of money even more. If it worked once, it might work twice. Let's not buy today, either; maybe we can get them down to a buck. Pretty soon the people who were making all that stuff stop doing it; they can't make any money, because they can't sell anything. So they shut the doors and lay everybody off. This is how depressions happen.
What's under the hood there is that economies need the supply of money to grow at about the same rate as the quantity of stuff to buy. Anything else will cause either inflation or deflation. Whether the money is fiat or not has nothing to do with it. An economy that is on the gold standard, which for some reason (like a new technology, or multiple new technologies) experiences very rapid economic growth, will soon find that there isn't enough money to go around. The gold miners do not necessarily become more productive at the same rate as everyone else. They may be digging as fast as they can, but they still can't keep up with the rate of growth in the amount of goods and services in the underlying economy. If that were to cause a depression, people might reasonably decide to de-couple the "money supply" from the rate at which gold miners can find and dig up gold. They might, in other words, move to a fiat money system where the next time this happens, somebody can just turn on a faucet and make new money come out, at whatever rate we need it. This is in fact what happened in 1933.
Can debt support debt forever? Almost certainly. We have enough experience now to know with 95% confidence what the overall default rate on loans is going to be. There will be times when it's a little higher, but unless there is deflation, it's highly unlikely that every investment made by everyone who borrowed money will fail, and cause a default. It's like oxygen atoms... in theory, Brownian motion could cause them all to migrate into one corner of the room, and stay there long enough to suffocate every human and animal in the place. In theory. It never really happens though. It doesn't happen with investments, either. Overall, the debt loaned out results in the creation of more real wealth (actual stuff to buy or use) than was borrowed. So the debt does get paid back, and the cycle does continue.
So long as that happens, the existence of "debt" is little more than an artifact of double-entry bookkeeping, which requires that every asset have a corresponding liability. By definition, so long as there are assets, there are going to be liabilities. The guy who tells you that liabilities are bad either doesn't know how accounting works, or has a secret plan to wipe out assets. For most of these kinds of "The Fed is a Scam!" threads, I think it's the former. The people who write the material on the kookburger web sites might be of Type B; there's enough Marxism woven through their stuff that they might really be out to hose up our economy.
It is clear that a single commodity, gold, has been respected for the ages as a store of value and was easily divisible by weight into the other two functions. There is however, little that is intrinsic about gold that makes it such (in time of war perhaps lead might be a preferable substitute ;-). Given rapid change in technology there has been an enormous accretion of the significance of the substitution effect (and a commensurate convergence of indifference curves). It doesn't take much of a change in an economy to convert a customer from the use of any commodity when the technology to substitute that commodity exists. That renders any individual commodity, including gold, a poor store of value. There is however a problem with using a composite of goods, land, or anything else for that matter, as a store of value: it fails as a trustworthy basis for either a unit of account or a store of value because analysis of that store is so subjective and variable with the demands of business cycles. This perhaps explains why that cyclicality is the enemy of our current monetary system and why that market basket of goods as an indicator of inflation gives so many people the willies (especially with clowns like Beelzebubba cooking the CPI numbers).
Personally, I think that an options market on assets as stores of value for competing, insured, private currencies is a partial answer to the problem. I also think that the current trend to universalize currencies in the name of minimizing the reserve currency function, facilitating trade, and unitizing the ecount of economies is a red herring for an obvious power grab. The current transition to the Euro will amply show itself to be an obviously intentional SNAFU and a theft from the people of Europe. (That little drama should also inure people to returning to putting politicians in charge of their money). Dollarization is a similar scam IMHO. Electronic calculators with wireless connections to currency markets could make both unitized pricing and the reserve currency issues both non-problems.
So for me, the current (and hugely important) issues in money are not at all what is being argued about. There are problems, there is major skull-duggery, and our freedom and economy are at risk to a bunch of unaccountable thugs, but not for the reasons so often bewailed. What do you think?