I think it's obvious that Bitcoin-only economy is going to be volatile no matter what. Unless we reach certain point that the market has mature already. As Maturation might reduce volatility and then Bitcoin becomes the dominant unit in the economy.

Fiat on the other hand, allows Central Bank to adjust, so there is no volatility, but money printing.

So I guess it's better to have this two together and co-exist to have a healthier economy.