Lots of questions - I'll take them one by one...
Yes, the national money supply decreases by the amount of each bankruptcy.
The Fed does not "print" trillions of dollars (as in currency). The Fed can make borrowing easier (where each new debt increases the money supply) - as well as hold auctions, where currency is balanced against debt (bonds, notes, and bills). The Fed (international banks) also can make borrowing very, very difficult (see 2008), where they gain the underlying assets of defaulted loans (largest transfer of wealth in history).
Price inflation can be caused by many factors - deflation being one of them. What does a business owner do if they're struggling to stay in business? 1) Lower prices and hope to make it up in volume - or usually 2) Increase prices, since that's the only hope left.
Silver is simply a commodity. It would be lower in price if there weren't so many with the false belief that it has some kind of "extra" worth.
Commodities go down in deflationary periods. I expect gold and silver to do likewise.
Ok we can say that but how does this actually happen?
Lets say Joe Exotic has a million bucks in the bank. He decides to open a pizza business and buys the building and all the equipment with his million dollars. A month later he has not sold any pizza and closes up shop with a total loss of his investment. Joe is out the million bucks he gave for the building and the equipment. How does this result in a million less dollars in circulation?