they could have simply asked their grandparents, as a similar phenomenon described the previous ninety years. inflation in the united states is generally recognised to have been greater from 1913 to 1999, but not by as much as the often-disputed '90%' figure would have you believe. (probably it was about twice as great in the 20th century as the 19th century, though i'm saying that offhand without looking at the best data.)

more to the point, very few people held dollars outside of interest-bearing accounts, particularly after the federal deposit guarantees that followed the great depression in the united states. as ribuck pointed out, most people matched or beat inflation in practice, with those interest-bearing accounts. my point is that to focus on the inflation of the currency, out of context, is itself 'extraordinarily disingenuous'.

i want to avoid the inline quoting in the rest of the responses, so i'll just address your points in freeform.

first, social security has nothing to do with what we're talking about. if you want to say that social security isn't sufficiently adjusted for inflation, that's fine, but again, that is not an indictment of monetary policy. if social security were properly adjusted for inflation, your concern here would fall away. (please, though, let's not have a general debate about social security. i recognise the american tea party calls it a 'ponzi scheme' and that those views are common in this forum. it's a profoundly and tragically misguided understanding of the system, but i don't want to debate that in detail here.)

second, i referenced my 'credentials' (not really; i just made a claim that i knew what i was talking about) only because you suggested that i ought to be ignored, incorrectly terming my analysis 'feelings' that ought to be easily dismissed. i'd never have brought anything personal about myself up if you'd responded to my analysis instead of dismissing it as coming from someone inappropriately emotional, which is of course far from the truth.

third, and probably most importantly, interest rates do affect riskfree savings, but their effect is largely to shift riskfree savings to 'investments'. in practice, empirically, they do not substantially decrease 'savings' as opposed to 'spending'. if all they do is shift around what 'saved' money does, then we're back to the point i've been making all along: nobody is forced to experience the inflation of the dollar, and their choice of other instruments (such as commodities) does not significantly distort the economy.

note also that you're criticising low interest rates, which ordinarily do not coincide with inflation. you may be upset at a particular feature of the monetary landscape over the last few years, and other actions of the central banks of major industrialised countries, that have little to do with inflation. as i have said from the start, i'm not telling you that you should not oppose all central banks' decision. i'm just telling you that you're opposing the wrong ones.

westkybitcoins: for much of the period you're describing, the group of 'middle class' americans to which you're referring held extremely little cash, and they held essentially none outside interest-bearing accounts with which they matched or even beat inflation. furthermore, many such families 'saved' in non-cash assets, such as a family house.

to be clear, however, i'm not disputing that inflation takes from some people and gives from others. that's true of anything, however; it's true, of deflation too, for example. who benefits and who suffers is a detailed empirical question that requires nuanced analysis to answer, just like questions about the true incidence of a new tax. for instance, if we all used bitcoins, the eventual presumed deflation would affect salaried laborers versus investors in very complicated ways that are hard to predict based merely on the notion of 'deflation', for they would depend on many other macroeconomic and psychological factors. (for example, how sticky are wages? how are pensions computed?) to answer these questions with ideological generalities will almost always lead to wrong answers and bad decisions.