> inflation requires individuals and companies to grow to maintain value, that is potentially unsustainable.

Are you talking about currency inflation or economic inflation? If a companies assets are appreciating against currency due to inflation, then that is in and of itself the growth aspect of competing with inflation. Nothing about an inflating money means anything needs to grow, it just means if you are holding dollars you are losing value. So just don't hold dollars.

It is bad because hoarded money might as well not exist. It exits the monetary system and effectively deflates the monetary base and reduces monetary velocity because its exited transactions for however long the holder wishes to take it out of circulation. Of course, it is really hard to even imagine a situation where you could do this with traditional fiat - unless you stuff it in a suitcase and hide it in your wall, you don't put money in any bank and not have fractional reserve banking done with it.

> Because everyone is yoked together by leveraging, a catastrophic event, say, a tsunami in seattle, will domino over such that the individuals depending on the fractional reserve of the victim's holdings will then be forced into default, and those dependent on them, and so on and so forth via the multiplier effect.

You need to distinguish between that fractional reserve banking model and inflationary high velocity money. With cryptocurrencies you pretty much cannot do fractional reserve banking, because you cannot unspend transactions and the entire transaction history is perfectly transparent. I mean you could, but your users could then track their money through everyone you loan it to, and you cannot loan out more than you have. It would at the least be a very different beast from our current model of "trust us, your money is 'safe'". Unless you are on a deflationary or otherwise static currency like gold backed dollars your assets are just not in that currency.

And that works fine with a reactionary inflationary cryptocurrency. Nothing stops you from using bitcoin as a wealth trap like gold, where you just take its scarcity and the value of its network to provide value to the depreciating resource. Throw your inflationary coins into bitcoin, and then sit on bitcoin, there is your gold hoard. The point is that the inflationary currency then changes hands, and the whole point of a modern money is for it to be spent. If you discretize the store of value from the unit of exchange you avoid all the issues mingling them togther.

> it managed to survive a massive civil war that tore apart the nation and not 40 years later it was basically one of the world powers.

The Civil War increased Union national debt fifty times over, from about 60 million to 2.8 billion. It was an unprecedented amount of bond issuance and international loans that has still never been paid off. You would be surprised how well nations can weather spending a lot of money - they can get some of the best loans out there, after all, either from their citizens or from other nations. You don't borrow 15 trillion dollars, ask for another trillion, and get anyone lining up to take that offer anywhere unless you are the USA.

> non-inflationary system cannot handle an catastrophe

They can handle catastrophe, you can even postulate they handle it better since you don't need to liquidate assets to an inflationary money if you just hoard the cash. Its about everything that is not a catastrophe, the daily operations of the economy, and a deflationary currency turns a normal day into a catastrophe when people stop using their money because they want to hoard it in a safe. That depresses the whole economy and slows down everything when you are not aiming for maximal monetary velocity. Your currency is not the place to store wealth, its meant to be the transactional unit of goods and service exchange, and trying to make it do more than one job makes it do all its jobs poorly.