The Bond Game

The bond game, or the mill game as it is sometimes called, is where the government borrows via bond sales some of the already circulating debt-money that resulted from fractional reserve lending, accumulates a percentage of debt as a result, and then spends it back into the circulation just so it can repeat the process. Every time the debt-money passes through the bond mill, more debt is accumulated. This can also be called insanity, as the US debt perpetually spirals upward with every turn of the mill wheel. 

Who buys bonds and how do they get the money to buy them?

Foreign nations buy them by converting some of their own currency for debt dollars and then use those debt dollars to buy bonds:

https://www.youtube.com/watch?v=uMa0Efo5C0I

Also the trade deficit results in adding to the bond sales and the raising of the national debt:

http://www.cepr.net/index.php/blogs/cepr-blog/debt-to-china-budget-deficits-and-trade-deficits

Individuals get their money either from a paycheck or a loan and buy bonds. Remember that the money for the paycheck can be traced back to a loan somewhere as all money in circulation other than the reserve currency itself, comes from fractional reserve lending.