To some extent, even stable currencies suffer from significant manipulation by governments. This is not a tinfoil hat idea, it's generally why non-corrupt central banking helps achieve social stability.

But central banking is a large hammer, and so even in the US there are many uses of currency where Bitcoin shines. Also, over time no central bank has managed to avoid some form of corruption (this is concerning both for fiat and centralization-prone cryptocurrencies like Bitcoin).

But the factors that lead to corrupt central banks are not primarily monetary, they are social/societal, causing those banks to bend to the whims of some interests while ignoring others.

The interesting thing to observe will be how/whether Bitcoin can adapt its broader organizational structure to make it less vulnerable to these forces of "bad" centralization. Also, if trends continue, the risk-takers of today who own Bitcoin may well be the wealthy influencers of tomorrow and may not take kindly to some of the sensible changes.

There are many, many ways in which Bitcoin is far superior to the typical fiat + central bank system, though, most notably its international nature. Even if Bitcoin's ability to avoid problems is only 90% as effective as the most effective fiat systems, that is a tremendous improvement for most of the people living on Earth.

One of the things the better fiat currencies have is stability of value. Bitcoin (at least so far) has failed rather dramatically at that. It's been mostly up so far, which makes many people willing (even eager) to accept the lack of stability, but it definitely hasn't been stable.

Very true. It's interesting to think of what you describe as a side-effect of the design decision (by Satoshi) to "bootstrap" the currency by strongly incentivizing speculative mining.

Zimbabwe uses the US dollar.