This is pure ‘bond fairy’ nonsense. Even Paul Krugman (when not writing about MMT) has debunked this sort of scare-mongering, time and again. But let’s be clear why. First, people can’t dump money. Ultimately, it’s what they have to make exchange. So the idea that they exit money forever is absurd.
Money’s convenient, sure, fiat money works as long as it is so. But that money is a medium of exchange does not mean that fiat money of one particular flavour or government is the only medium of exchange available. It’s tough to buy things with confederate dollars these days. OK, so, the government doesn’t exist any more. The Feds do and continentals aren’t worth much either. Zimbabwe is still a country, still has a government. The $Zim 100 trillion note doesn’t buy much. How many zeroes have they knocked off the Soviet ruble now?
We might even concede that that departing money forever is difficult but that doesn’t mean that leaving behind one specific fiat currency is.