Was there no innovation during the free banking period of 1860-1920? I seem to recall at least one ground-breaking invention that happened during then.
What fiat money is good for is so the government can spend whatever it wants to without needing to tax it or balance its books. Fiat money makes financing of wars possible, for example.
The notion that fiat money makes for stable financial markets is obviously false, although it is persistent.
The explosion of the railroad system solved those problems, but that was around 1870.
Massive oil, gas and coal reserves are hardly unique to America. Oil, for example, has made Saudi Arabia very wealthy, but not an economic powerhouse.
These people just don't get that civilization is energy flows and culture, not laissez-faire economic policies.
Anyhow, my point was fiat money was not a necessary condition for such prosperity.
About ten years ago I had a friend who had been convinced by blogs that we were on the path to hyperinflation. He started buying gold and silver like crazy. Back then you could read a lot of smart-sounding people who would tell you all about how the inflation apocalypse was imminent (Fed balance sheets, stimulus, etc.) I almost bought into it too, but I didn't really have any money to sink into gold and silver. Really glad in hindsight.
I think Satoshi, who ever he was or is, was a brilliant engineer and cryptographer but his skepticism of fractional reserve banking and his general distrust of the financial system makes me believe that he only really dabbled in macroeconomics and banking.
We should all be really, really glad that previous innovators did believe in fractional reserve banking, credit markets, and fiat currency. If you like modern life, I mean.