I think you are exactly wrong about “never seeing worldwide bankruptcy” with fiat money. Because of human nature, fiat money eventually destroys itself as a reliable medium of exchange. No fiat currency has escaped this eventuality. The only question is how long it takes.

On the other hand sound money forces timely bankruptcies at a smaller scale. Even without a gold exchange standard, rules-based monetary policy would not have allowed interest rates to go as low as they have. This would have forced poorly run companies into bankruptcy long before they could have calcified into the deep strata in the economy they are now.

“Worldwide bankruptcy” is not a legal filing; it is when the unit of measures the world uses are no longer viewed as reliable units of measure. At that point no one what knows what anything is worth. Balance sheets are meaningless because the unit of measure used on the balance sheet is useless. That is the history of fiat money and there is no rational basis for believing that this time is somehow different.

But by acknowledging you view money as a tool of the state, you help clarify an even more fundamental question: What is the most significant unit of society? The state or the individual. This is, again, Hobbes vs. Locke. If the state is, then the individual (and his or her labor) exists for the benefit of the state. If the individual is, then the state exists for the benefit of the individual — which is to secure the liberties belonging to her by nature. What you believe about this then drives how you see money. And that pretty much then drives how you see politics.

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I am a charter member of the pocket-protector set, but old enough to make fun of them and otherwise have a healthy skepticism of tech. https://goo.gl/2z5Snr

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