The moment you cash-out your bitcoin to a bank or an exchange or to any other means that requires a real world identity, pseudonymity is lost. Satoshi's rally for privacy goes down the drain. Your identity is uncovered. They can already trace your bitcoin wallet address and all other wallet addresses you transacted with.
Did satoshi really rally for privacy though? I genuinely don't know. I always thought that the focus was on decentralization.
I do get your point, but wouldn't it be the same thing when let's say, you buy an item off a merchant directly with Bitcoin? Your identity will be uncovered one way or another, and they can just as easily trace everything you mentioned even without banks. I'd say the way out is mixers because you can cut or at least shorten your trail with them, but the moment you transact with another person (or most of the time anyway), you cede some level of privacy.