To think bitcoin can acquire a stable deflation rate is to assume that the economy stops cycling, that's simply not going to happen. Every boom will cause a massive deflation period, it can't be stable.
Speculation is the least of bitcoin's problems. I think a crypto-currency is inevitable, but it'll be one that has a mechanism in it to inflate and deflate to match the demand for currency in the market. During a boom there's a higher demand for currency and the supply must increase if prices are to remain stable, otherwise deflation is going to happen in an amount that matches the boom; that's not stable.
The government has more than one control over the current money supply, fractional reserve lending allows the money supply to grow and shrink as demand requires while the fed attempts to maintain an overall small inflation rate to avoid the ill effects of deflation.
> Who cares if prices stay stable or not?
Everyone who understand economics even a little bit.
> The value represented by whatever price is attached to those things won't change
People aren't paid in value and they don't spend value, they're paid in currency and they spend currency and they all care that prices are stable because their paychecks aren't going to suddenly change.
Speculation is the least of bitcoin's problems. I think a crypto-currency is inevitable, but it'll be one that has a mechanism in it to inflate and deflate to match the demand for currency in the market. During a boom there's a higher demand for currency and the supply must increase if prices are to remain stable, otherwise deflation is going to happen in an amount that matches the boom; that's not stable.