But how will the Federal Reserve be able to allocate new blocks of bit coins to give to one of the 12 federal reserve banks so we can fund more trillion dollar packages of spending borrowed money if all they can do is try to acquire bitcoins from other people who have them?
In theory, would inflation be impossible with bitcoin provided that the number of humans who are willing to exchange labour for coins always increase?
Wikipedia's page on the Federal Reserve, particularly the section on 'Purpose' would seem to disagree with you. But it is only wikipedia and may well be inaccurate.
Which means, if bitcoins were to 100% replace US Dollar today, the US Government would have to immediately default on the treasury.
I get the sinking feeling that when Bitcoin takes off for it to make any kind of fractional dent in society, it's going to be squished like a bug. After having been linked to WMD's and terrorism.
In theory, would inflation be impossible with bitcoin provided that the number of humans who are willing to exchange labour for coins always increase?