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Considering the Federal Bond illusion technique, the island inhabitants would again similarly be left with bonds representing the PERCEPTION of wealth, when in fact no one on the island again is committed to repay them, if later a bond owner attempts redemption. Sam’s message to all inhabitants is that on the one hand his Federal Bonds are a safe investment representing real future wealth to the holders when redeemed, then on the other hand, the concomitant island government obligation to pay them is a mysterious “black hole” of future limitless taxing authority that is always assumed to satisfy these obligations without any individual committed to that fulfillment task.

This is where it falls apart. Uncle Sam has the ability to use force in order to get the others to produce the labor to repay the bonds. Uncle Sam can garnish wages, or forcible take the goods and services that the other three produce, while putting a "Seized" sign up on their doorposts.

The laborers are committed (through debt slavery) to repay the bonds. Uncle Sam will see to it.

P.S. : The author is confused about the relationship between labor and money.

The only way that the islanders could buy the bonds is if they had money with which to buy the bonds. This brings up the question: what is money?

Money can either be based on stored completed labor, or it can be based on claims upon future labor (debt - like our economy).

The islanders are wanting to buy debt, so why would they promise more debt to buy it? Assuming their monetary system is based on a store of completed labor then that won't work either. The example the author gives has the population consuming everything they produce each year. There is no storage of completed labor (capital) with which to purchase the bonds (debt).

The islanders could work overtime in order to produce more than they consume - then use that capital (storage of completed labor) to purchase the debt (claims on future labor), but the author doesn't go there.