There is no reason for people to prefer cash if banks and their deposits are guaranteed

The debt created by the banks and the Government cannot be repaid in the conventional sense otherwise it would not cause (have caused) inflation.

The only way the banks and the Government will be able to repay their debts is by printing money, assuming repayment is not delayed for a longer time. The debt cannot be repaid in the conventional sense, by those to whom it has been loaned, we know this because otherwise the money would not have been loaned, firstly. The debt cannot be repaid unless it is monetised, and so, in that sense, it is not really debt.

If cash is much better than bank credit it would make sense for there to be (to have been) a bank run.

Inflation results from a reduced value in the currency, which can only mean that something else is present (and has been added) which has the same function as the original currency. If bank credit does not serve the same function as paper money, it would not cause inflation. Cash has no function above that of bank credit, people like bank credit just as much, perhaps because they are not aware of the distinction. If bank credit is not a form of money, or something like it, it makes no sense that there is no bank run. If cash is much better than bank credit there would be a bank run. The absence of a bank run suggests that bank credit has 'special' value.