Having people clamouring unto the government for there safety isn't exactly a bad thing. Besides, you operate in a jurisdiction and this jurisdiction is guided by certain laws and regulations that ensures the orderliness of things.
The bad news is, having so much trust in a system, believing that this is one way to be right always and that the government would do you right always is some way to leave all your reasoning to the government and when they ride on you, you don't even get to notice. That's just how bad it is.
People needs to make use of there brains or have it used for them by someone else or a group even.
If the government cares for the people;
Provides for the people in terms of employment and social needs;
If government upholds the right of the citizens;
If the government secures lives and properties of her citizens;
There is no harm to believe the government.
It is when the wrong people enters power and abuse it that makes people lose confidence in the government.
Assuming government has a way to fight inflation, a high rank government worker, who has government retirement plans and running businesses, will the person have any need for bitcoin?