You may in fact believe this in good faith. The last paragraph is nonesense--none of the stuff anybody has backs either the "medium of exchange" or "store of value" element of the money supply. But the rest of what you say is is a parody of the party line. But you will get to eat these words with the establishment at a very near point in the future when the contractural or fiat system will cease to work.
The idea that you can create a system of rights (to use the paper to extinguish "all debts, public and private") by writing down and describing them in legislation or in contracts is a fine idea supported by the lawyers.
Conceptually it works pretty well when the rights and obligations are simple--I promise to pay $100 for your car which you promise to deliver in exchange for the $100. It still works pretty well when the res--the car--is a complicated asset, or where what I agreed to do in exchange is complicated--pay you a number of dollars based on the trading value of the dollar or London Interbank Interest rates or whatever.
Now however, we have not only the problems incident to the fact that the value at which the paper is to be accepted is subject to whims of government spending, or the need to create more dollars to meet the requirements of spending in excess of revenue, we have also some much larger scarier problems. People have entered into agreements to pay money to buy portions of aggregated portfolios of debt or debt instruments (bonds or notes secured by mortgages) and those agreements are themselves either banked or borrowed so that the bankor or borrower in effect creates more fiat money increasing the money supply. We have other contracts where a large market maker buys Natural Gas from producers at a fixed price today, agreeing to take delivery a year hence and pay the price thirty days after delivery (Enron for example) and where the market maker (Enron) then either resells all or part of its right to take delivery or sells electricity it plans to make with the NG to some third party, Enron banking the right to get paid for the electricity and creating money and where the guy that contracts to sell the gas creates private money with the receivable side of that transaction also. What are the rights of the parties now? Even the smart lawyers will have a difficult time figureing it out.
When performance of some of these contracts becomes a problem for the obligor, they don't perform--they hire lawyers to help them get out of the obligation or to excuse their non performance. When this happens to Enron, the consequences are largely manageable.
When this happened to LTCM, the Fed was concerned that it might not be able to manage the consequences.
Where we are now in the real world is that the total of these contractural relationships that result in creation of money or credits that have been used as money is so large that any number of foreseeable defaults would be large enough to bring down the fiat money system. Some people think it is only a matter of time until that happens.
To address the point, in a specie money system, that risk would not be there. Further, although the establishment money managers are of the view that money cannot be manufactured fast enough to support our modern commercial economy (gold can't be dug fast enough), there is no evidence to support that proposition and thus I tend to think that is wrong.
If you want to look at a more complete definition of the problem of the Credit money system, look at Doug Noland's weekly colums for the past two or three months under the title Credit Bubble Bulletin, at PrudentBear.com. Noland has become the online expert in the financial system exposure to the instability of excess credit money.
Another good piece of evidence is what has happened in the international gold markets the last week or so--something is about to occur that will dramatically impact the purchasing power of the US dollar. I tend to think this subject is about to move from the discussion stage to the real world.