What if bitcoin goes back to the single digits and then grows 5% annually over a decades?

Apparently he really is desperate for attention.  The point here is, when it comes down to it he's your typical politician, loudmouthing about everything that's currently popular.
Bitcoin is no exception.

Don't send gox any money

Butthurt usually is diagnosed on the one making the insults.

I don't have to explain myself.

At first: I haven't said it's every aspect of the economy, I clearly stated what part this would be about. In particular mtgox(confirmed) and bitpay(probably) are what they are concerned about.
Second: This is about how Bitcoin is being used not what it is.

Do you think the FEDs are that stupid not to realize that the only way to fight silk road is on their terms? The signs should be pretty clear by now if you look at the succession of events. They won't to squash to undermine the legal efforts of the economy since that would only make it harder to hunt DPR & co.
Last: This requires no tinfoil hat but just common sense, which seems to be in short supply lately...  

Of course you're right, but still such a situation wouldn't be something to look forward to.

I don't really know. My opinion about this subject goes like this:
There are piles of nukes and there are piles of idiots, and the probability of nuclear war is directly proportional to the number of piles of nukes times the number of piles of idiots times the discrepancy between the size of the piles. Both of the latter has been decreasing, and I wouldn't argue that the number of idiots gonna come down any time soon.

It could be that I went a bit more optimistic about the current state of affairs since I noticed that the most popular critics of the system do not have the answer either. What I do believe is that most of the time people get along. In the case of nations in economic competition I do think that ultimately the local economies will become relevant again, simply because at a certain point transportation becomes prohibitively expensive.

Uh I can't really see that statement as being about the Bitcoin Protocol. He's talking about the economy, most likely that concerns exchanges, merchants and such.
Still remember that the main reason for the crash at 266 is commonly attributed to the inability of mtgox to provide a decent market platform?

Likely, what you have to consider though is in the instance of pot prohibition it doesn't only affect marijuana as a drug but also it's usage as medicine, industrial hemp and using it as a food crop.
A Bitcoin prohibition would have similar deteriorating effects.

There is much that could happen but none of it is likely.

From a better standing and releasing of seized funds to charges against foundation heads or even arrests many things are possible. I don't expect either to actually happen.

Someone would still have to store it. It's not like some part of the blockchain could be omitted by everybody.

They could argue it's not the accounting ledger that's illegal but the excess information that is already. And because there are no methods available to prevent somebody to store more illegal information in it it can be declared illegal to posses the block chain.
You have to keep in mind to follow how a bureaucrat would think in case he is supposed to "do something about that".

It is clear that such a thing would be difficult to enforce, and somebody somewhere would still store the blockchain regardless of the potential consequences (a lot of people actually). But it would sure be a pain for anybody with a company to openly use Bitcoin. Think about how pot prohibition works.

Paranoid much?

A brain wallet is pretty much useless if the Blockchain is declared illegal information. That's even the most likely scenario of a goverment crackdown - CP links encoded into it ring a bell?

Just like nuclear war is inevitable, and nuclear proliferation won't happen, the cold war gonna kill you all.

Wait, nuclear stockpiles are decreasing since over a decade? Unfathomable!

People accept the default of other people, deal with it. That includes banks and central banks.

It only requires exponential growth if loans are expected to be paid back. Compound interest stops compounding in case of a default or in case of a remittance.

That's like saying 80s fuel prices are coming back. They're not.
The debt based money supply has as much to do with the stock market as it has with any other sector.

The solution is simple: Periodic remittance of loans, be it in the private sector or the financial sector.  And this is happening all the time, cyprus was just one of the more visible ones.
This is something no Libertairan Doomsday Cheerleader is willing to admit: The system actually has mechanisms which can keep it sustainable. You just can't profit from it individually.

Pigs gonna get slaughtered.