This has happened twice before in Bitcoin's history:

http://bitcoincharts.com/charts/mtgoxUSD#rg5zigDailyztgSzm1g7zm2g25zl

The last two times, we went up about 1.5 orders of magnitude quickly, spent some time cooling off.

They won't give them up, but the NSA might deploy Stuxnet to steal them.

There's going to be a brawl involving the  Federal Reserve, JP Morgan, and Goldman Sachs over who gets those spoils.

Things are not looking good for the USD. It's fallen below the 2 mBTC level for the first time ever:

For the first time ever, one ounce of gold buys less than 3 bitcoins.

Added another week's worth of data:

Fiat is a game of hot potato, and you really don't want to be the loser.

Your description about the current state of the US is exactly what everybody was saying about the USSR near the end too.

It seems to me that "crumbling" is an apt description of a military that loses more soldiers to suicide than enemy action.

"Crumbling" also describes the morale of government employees and public confidence in general. I mean, they can't even get a simple website right.

If you have Bitcoins, you win.

Just remember no matter how badly you trade, at least you're not this guy (remember him?): http://www.youtube.com/watch?v=S3xhyj-e0Kk

That only happens if the leadership believes their interests are best served by keeping the game going.

They could just be like Gorbachev: loot what they can and then retire in style somewhere else.

Can we get a bot that automatically detects these posts and sends people to the Wiki or something to explain why deflation isn't the end of the world?

One optimistic interpretation of the surveillance and anti-insurgency machinery being put into place right now is that it's not aimed at the productive portion of the population but rather is being constructed in anticipation of the apparatchik and welfare hordes going apeshit when the checks stop flowing.

Anyone who's been paying attention realizes those two groups (especially the apparatchik) are insane.

Look at what happened a few years back when a couple state governors suggested that public sector unions take the slightest bit of future concessions with regards to collective bargaining: death threats, strikes, and near riots.

Imagine what they'll do when the "out of business" sign goes up for real.

Incidentally this theory also explains why zombie movies got popular all of a sudden: it's our collective unconscious awareness of this impending scenario.

Look at this chart, and compare the $10->$266->$100 period from earlier this year with the 2011-February through 2011-April time period: http://bitcoincharts.com/charts/mtgoxUSD#igDailyztgSzm1g7zm2g25zl

I'd post a chart with those two regions circled, but my MSPaint skills aren't good enough.

Short answer: We're going to have consumer protection, and it won't require altering the Bitcoin protocol to include chargebacks.

You are correct that this is the normal state of operation of the government.

This may not actually be how it plays out this time, however.

The behaviour you're describing is how governments behave during their ascendancy phase.

As the system approaches Peak Government, however, they start employing different strategies. If you want to know that looks phase looks like, play close attention to the behaviour of the high level bureaucrats and politicians in the former USSR during the time period between the fall of the Berlin Wall and the dissolution of the USSR.

It's possible the USA is on the cusp of the "rats fleeing from a sinking ship" portion of the cycle.

Try sending Olaf a message through this forum's PM system.

BIP32 support means there's no reason for Blockchain.info wallets to reuse addresses.

BIP32 support?

On a related note, that's what I tried to express here: http://bitcoinism.blogspot.com/2013/11/eli5-bitcoin.html