Whoa, ease off on the hyperbole.  I don't think you're giving our modern fiat currencies nearly enough credit (especially where physical cash will be phased out).  For example, how do you freeze an account under this proposal?  Can you still keep the existence of bitcoins you own secret?  Is (worldwide) coin mixing still a (potential) option when necessary?  Are anonymous, off-blockchain transactions still a (potential) option?

I also think you're underestimating how much serious coordination among all the governments of the world it would take to force a non-voluntary, repressive version of this that's actually effective.  This is not to say a voluntarily used version couldn't be effective - or at least more effective than the current tracking systems in place, whatever that's saying.  But it would at least be harder to abuse, and police would have to actually make phone calls and knock on doors, rather than simply scrape a database without any meaningful consent.

And all the while, as adoption spreads, the human component of the network expands, along with awareness of monetary privacy issues and the political capital required to actually resist, rather than simply hide from, such abuses of power.  I believe people would be much more willing to make a fuss about something that affects them directly, like being enlisted as spies to their fellow citizens, than the current situation where they never actually see the abuse of privacy.  I also believe more aware people will be more willing to adopt better solutions as they may arise.