I like what you said. A couple comments:
1) It's unreasonable to conclude the meteoric rise of btc has much to do with a falling dollar at this stage. If gold and silver were rising substantially in this short timeframe, then one could make such an argument. The more likely reason btc is skyrocketing is because thousands of new people are discovering it every day, and deciding that it's a damn cool thing and worthy of marginal investment. Further, there will be nothing remotely close to btc replacing the dollar or other currencies until the system of btc is smooth, easy to use, reliable, and convenient. We need bitcoin credit/debit cards, bitcoin banks, bitcoin insurance, etc. We need to be able to buy food at the grocery store and gas at the pump with a direct btc payment. These services will be built by entrepreneurs but it will take a while. The terrible fiat currencies will never be fully replaced until we have this.
True, despite my desires to the contrary the greenback refuses to die
However I am rejecting debt based currency. I will still trade in it but I will not save in it or one of it's derivative products (CDs, bonds, stocks (maybe someday), mutual funds) I'm sure to a greater or a lesser extent you are too. We want to leave fantasia and never come back.
If there is however a currency crises and/or the tropical fruit has impacted the rotary cooling device then the current banking system will sheer apart and BTC even at it's current level of development will be a much better option.
2) The most likely way the US would outlaw BTC is by making it illegal to accept BTC as a form of payment, because it's easy to find and prosecute vendors who advertise this. Let's remember, though, that the US is not God of the Universe. There are dozens of other countries that would have to make it illegal as well for btc to be totally screwed. I doubt politicians are effective enough to coordinate such a global attack. Further, I think the kind of political environment where that attack could happen is the kind of environment where sh*t has hit the fan, fiat currencies have collapsed, and the public is panicking. I doubt many people will CARE if governments outlaw btc at that point. Rebels will be plentiful!
It's hard to tell. I'm from South Africa and the man residing over the Reserve Bank here during the financial crises is now working for Goldman Sachs. He was sent for "economic training" by them in the 90s. Governments might not be able to push for co-ordination but their owners can. They already have the world on global debt based fiat currency and are consolidating that position into SDRs from the International Monetary fund. The mere fact that they convinced every country on earth to abandon gold or sovereign money (with very few exceptions) should give us pause.
But I'm harshing my own buzz ;-) I hope they respond in their normal sluggish way and one morning we just wake up and the Chelsea buns are in mBTC or uBTC.
3) Yeah I agree the whole deflation concern is silly. BTC is always increasing in supply (though at a diminishing rate) and thus there is technically never deflation, anyway. And besides, a world in which money increases steadily over time in value is nothing to be scared of. Us Austrians aren't too concerned =)
Go von Mises!