The interest paid on HBD is in addition to the "regular" inflation. So it does come out of "thin air".

HBD isn't debt: it is demand for on-chain stability

HBD is debt, it is redeemable upon request via conversions. Not having a ceiling on the debt (aka the "haircut rule") can only have one outcome...hyperinflation of Hive.

Once the markets go south (which is inevitable) and hive dollars start trading below the peg you would see the conversions ramp up. This will put pressure on the price of Hive with the result of more of it printed in a downward spiral.

So yeah, not having a ceiling on the debt is a bad idea.