Government suppression of private money is inevitable in the entitlement-state era. What is the alternative? Are governments going to stand idly by while more and more people avoid taxes and sidestep inflation? Government largess depends on taxation and monetary debasement. If there were private money, the welfare state could not exist. So, can there be any doubt that the government will throttle virtual currencies?
Consider the attraction of bitcoin and the like. People are desperate to have a stable, non-debaseable medium of exchange–so desperate that they are willing to try a virtual currency backed by nothing, so long as they believe that its supply will remain relatively stable. But what makes for this desperation? Why isn’t the government-controlled dollar stable in value? Why does government inflate and debase its own money? The answer is: to finance the entitlement state.
Consider. It is politically impossible to tax people enough to pay for the cancerous federal spending. Just perform this simple calculation. Divide the $4 trillion of government spending by the number of taxpayers in the country. There are considerably fewer than 100 million Americans who pay any significant amount in income tax, but take that figure. The division works out to $40,000 per taxpayer per year. And of course spending is always growing.