Bitcoin is not a magic bullet which will instantly fix all the corruption and ridiculous monetary policy present in Washington. Theoretically, it would prevent the government (and banks) from lending money they don't have, but that's only if people hold their own bitcoin and don't rely on third parties. If I want to take out a loan and hold the bitcoin in my own wallet, then obviously the bank has to send me real bitcoin which they own. If I take out a loan and am happy to hold my bitcoin in a bank wallet or accept some fake wrapped bitcoin or pegged token, then there is nothing stopping them from continuing with the fractional reserve system.
The most logical part is that, blockchain is a ledger that everyone could see. This way we could ask the governments to show what they are spending the money on one by one and each of them. Right now it is behind a bunch of paperwork, but with blockchain it would be easier to see what they are spending money on.
Plus, we get to see their wallets as well and how rich they are getting from stuff, if they hide it then it is illegal, and if they have other wallets then we put them in jail or take all their money, they need to release every wallet they own, and add "politicians can't own stocks and get paid by the companies" then we would be doing so much more better with proof as well. That's how it should be, blockchain+illegal bribing would make things basically just perfect, after that we will only have people who wants to help, and all the ones that wants to get rich will get out because they can't.