If they (a government, large organization, etc) can "prevent selected individuals from spending their bitcoins" as well as track transactions they disapprove of, then what advantage does bitcoin provide except a hedge against inflation?
I agree. If bitcoins only purpose/advantage is as an inflation-hedge, there are numerous things that would serve that function. The major differentiator, in fact the only differentiator that will have a significant impact on economic growth and taxation policy, is bitcoin's potential for
user-determined anonymity and untracability.