Which means people will keep buying the IOUs. For now.
Ask youself who is stupider: investors and creditors who accept worthless pretend IOUs to cover known bad IOUs, or taxpayers who believe that the IOUs their government has issued in their name are fake and will never be paid out when asked.
You can't have it both ways, either you "solve" the problem with real IOUs, or you issue fake IOUs and "solve" nothing, since everyone knows they aren't worth anything.
The point of real IOUs is that there is real risk attached to them. It doesn't do to hope that things will work out without anybody requiring payment. -- $E(X_t|F_s) = X_s,\quad t > s$
