This slowdown in economic activity causes a recession...until once again their price goes up
If you were talking about a normal 'fiat' currency then yes I would agree. However if you have an absolutely fixed supply of currency then deflation is not an abnormal condition but the steady state. In such a condition I'm not sure that your argument holds because there is no point in holding off for when prices start to rise because they will not, at least not be any significant amount.
Even if you are right and steady-state deflation encourages people to hold off on purchases until they really need something perhaps this is not a bad thing. Reducing consumption is a good thing to do given the limited resources of the planet. As for the stability of the economy look at the UK recessions. The US is a relatively new country which had a rapidly developing and changing economy over the period you give also the measure used changes with different periods in the article you linked. If you look at the UK list then, except for the great depression, there is no real difference in the depth of the recessions but there may be some indication that there were fewer, but longer, recessions before 1931 when the UK came off the gold standard. So I don't see the evidence to support your assertions.