Deflation encourages hoarding, and results in inescapable debt slavery for anyone who doesn't have a surplus. Falling prices cause producers to exit the market, leading to shortages.

Your solution to the problem of inflation is the abolition of credit.

It should be noted that Bitcoin doesn't prevent fractional reserve banking; the currency is fairly irrelevant, as long as your depositors and regulations allow you to only keep a percentage of the deposits with immediate liquidity.

Heavens forbid a normal person ever be able to take out credit or anything. (Hint: Without fractional reserve banking credit would get VERY expensive).

Deflation rewards people with surplus income, which has little effect on those living paycheck-to-paycheck. The two bottom quintiles in the US do not have the ability to save; they won't magically start saving just because inflation goes away.

If inflation encourages those with surplus income to make riskier investments, and riskier investments benefit those living paycheck-to-paycheck (say by increasing demand for their labor) then inflation is to the benefit of those living paycheck to paycheck.

On the other hand, the upper-middle-class to wealthy do benefit from deflation, since they have excess income. If inflation doesn't benefit the less well off, then perhaps there is little reason to punish the wealthy with inflation. Those that would save more in a deflationary economy are already saving though.

Yes, because the "Centralized Bank" in 1929 caused the bank runs.

Oh wait, centralized banking didn't exist back then? Fractional Reserve Systems didn't happen back then? And yet you have a decade of the greatest bank-runs of US History?

And ever since the fractional reserve system was invented, there hasn't been a national-scale bank run in the US for nearly 100 years?

You might want to check your dates. From wikipedia[1]:

"The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907."

[1] http://en.wikipedia.org/wiki/Federal_Reserve_System

The Federal Reserve came into existence in 1913, and fractional reserve banking was absolutely being practiced in 1929.

If you're going to act all exasperated about something, at least get your facts right.

Fractional reserve banking dates back to at least the 1600s, practiced by goldsmiths in a time when currencies where privately issued.

Living paycheck to paycheck is not the converse of saving.

When I save money, I invest it in productive enterprise. Thus, I have less in my checking account. You could even consider (gasp) that I'm living pay check to pay check!

Without a central regulatory authority, what would prevent any private bank from lending out all its deposits? Nothing. And in fact fractional reserve banking predates the modern central banks by hundreds of years, and is one of the economic risks that central banks exist to manage.