I don't understand the point about physical cash in the quote. Both bank account credit and physical cash are fiat, and also treated as equivalent, therefore something that can be inflated and devalued. As long as people accept fiat as payment, the state can do deficit spending and therefore have more buying power (or just power) than it should have through taxation alone. Only if people lose all trust in fiat and do not accept it anymore, the state will have to acquire whatever else people actually accept as money (i.e. bitcoin).