One thing I like about your post is that it gives me hope of understanding how, if Federal Reserve Notes are based on "nothing" since the 70s, our currency hasn't collapsed entirely yet? I love Ron Paul but he's got to explain this one to me before I buy into it wholesale.
You say that it's because the US government forces other people to accept it as payment for debt? I don't understand how that enforces any particular value. It enforces that it's accepted, but what's to stop someone from asking for 10 times more than they do?
Or do you mean that for a debt incurred at time A at a given interest rate, it's guaranteed to be a certain ("inflated", but predictably so) amount by time B? What about with Bitcoins? The owner of the debt could lose credibility if s/he decides to change the contract and say "Bitcoins are looking bad these days, you owe me gold now instead". But I guess guns work a lot better than reputation loss against a currency collapse. Hmm.
I do believe you misunderstood the point. Let me try to clarify from my own understanding.
There are legal tender laws, but these are not the point. They are largely irrelevant.
The point is that the US government itself accepts dollars as payment for debt. This may not seem like a big deal, until you realize that governments are unique in their power to force a debt onto you via taxation. Just like their monopoly on physical power, they also have a monopoly on economic power - for a number of reasons, which are not really important here, but the concepts are indeed very similar.
So the government forces debt on people, which can only be paid using the dollars that the government issues. This creates demand for dollars and therefore value.
Side note: You can learn an important point lesson from this. In a fiat money system, taxation has nothing to do with financing government spending. Government (by which I mean the union of all governmental institutions, i.e. executive + legislative + Fed etc.) can spend whenever and whatever amount it likes. The point of taxation is to create a demand for currency, which entices the private sector to offer goods and services for sale in exchange for that currency, thus enabling government to execute its mandate.
Returning to Bitcoin, there is no entity that can force Bitcoin-denominated debts onto people, and therefore the only people using it are doing so either out of curiosity or out of ideological dislike of government-run monetary systems - or perhaps out of the desire to make money off people who are simultaneously fools and members of the former two categories.
You say that it's because the US government forces other people to accept it as payment for debt? I don't understand how that enforces any particular value. It enforces that it's accepted, but what's to stop someone from asking for 10 times more than they do?
Or do you mean that for a debt incurred at time A at a given interest rate, it's guaranteed to be a certain ("inflated", but predictably so) amount by time B? What about with Bitcoins? The owner of the debt could lose credibility if s/he decides to change the contract and say "Bitcoins are looking bad these days, you owe me gold now instead". But I guess guns work a lot better than reputation loss against a currency collapse. Hmm.
Or did I misunderstand your point altogether?