I'd say you're cotnradicting yourself a bit theymos... Monarchy is a system that gives way too much power into hands of one person, which is a danger in itself. As we know, power corrupts, and absolute power corrupts absolutely.
Then you say limiting the government is good, but a monarch would be able to rebuild the control with much more ease than democratically chosen government.
A democracy and a monarchy are equally capable of increasing the size of the state or refraining from doing so. If the members of the US congress all agreed to do so, they could turn the US into a communistic system where everyone was employed by the state. A monarch could, on the other hand, keep his government very limited. Just because a government is democratic doesn't limit its ability to grow, and in fact democratic institutions have a natural propensity to expand over time.
You are hoping for a benevolent dictator - sounds nice until he executes you and your family.
Democracy is bad, but it is the best form of governance we have at the moment.
Absolute power to a single entity will be always wrong - checks & balances is needed until humans themself change (which probaly wont happen).