You constantly contradict yourself.
First you say:
Fungibility is substitutability. It has nothing to do with anonymity
Then you say:
...That doesn't stop your fingerprints from being on the money.
It's not the fact that the fingerprints compromise anonymity that makes it traceable. It's the fact that they compromise fungibility. If the same fingerprints were on every banknote, you'd no longer be traceable against that particular note since it would be indistinguishable from any other.
Do you not notice the flawed subtext of your own reasoning ? It's that it's based in a credit-transport mindset where privacy, not anonymity is the priority. You're equating a blockchain address with a person or identity. Satoshi invents almost perfect money and you've fallen into the same old trap of dragging us back to a bank-based paradigm where a blockchain address is a person.
It isn't, and by obscuring (or encrypting) the mechanics of the blockchain you're not protecting anybody's identity in particular - you're just making crap money out of good money and mitigating its ability to garner and consolidate public endorsement of its value.
You'd have more of a case if we were talking about a backed currency than an unbacked one. Then there's a whole re-shuffling of priorities where encryption and privacy suddenly become a higher priority than fungibility and anonymity. You can also afford to compromise public transparency because only the trusted party needs to endorse your balance and if they generally do so then the monetary medium (blockchain balances) will have value. But that's a credit system, not a cash one. Notably, the principles under which Cryptonote operates were indeed originally designed for a credit network and not a cash one.
You do have a valid general point regarding "fingerprinting" of money, but that needs to be dealt with without recourse to encryption (read "obfuscation") because otherwise you're just corrupting the base monetary medium.