So I don't think the sky is falling. Nothing has fundamentally changed. "Bitcoin is like digital gold" remains a semi-decent analogy.
If you have cash on hand, that money becomes worth less as quantitative easing expands the monetary base, among other inflationary factors.
If you spend that money (on investments, goods, etc) then you are putting your long term value in other things than your currency.
The distinction is that the austrian school wants a reliable money sink that grows more scarce and thus more valuable over time. The modern US dollar is anything but a place to store value - instead, the monetary system heavily incentivizes you to get rid of your dollars as quickly as possible.
Which is fine, it means money doesn't rot in banks and fall out of circulation. You aren't at maximum velocity but you definitely have good momentum that way.
I think the real issue is blaming inflation for wage stagnation (which started around the same time the gold standard was dropped), when in reality it is just business exploitation of supply and demand that keeps wages down while all other goods and services prices rise somewhere in the ballpark of inflation.
I love bitcoin, and have a good chunk of my on hand cash stored in it for buying stuff or just having fun trying to play the price, and state currency manipulation does abuse their monopoly on legal counterfeiting to benefit a select few and hurt the rest of us, but it isn't an issue with having an inflating currency, I don't think.
It is why I like Doge in many ways. It is going to have constant inflation forever, so it is very predictable, and if it ever got market demand saturation it would only devalue over time so people would keep spending it. And bitcoin is a great peer to that, because we are only going to have a finite number of btc, and once the printing presses stop we will only see that money supply shrink from lost wallets and such, so they will only become more scarce over time.
Basically, the money supply was artificially inflated by the housing bubble. Once the bubble burst, a lot of money disappeared over the course of 3 months or so. So the fed is using QE to prop up the money supply so the dollar doesn't rapidly appreciate in value. What we've learned from Japan's "lost decade" is that deflation can have even more harmful long-term consequences to an economy than inflation (suddenly it becomes MUCH more expensive to make goods in the US than the rest of the world, banks stop lending completely because money gains value with no risk, etc.) It starts a chain-reaction cycle that is really tough to break out of.
So the fed wasn't gutting the value of the dollar as much as they were preventing it from appreciating value quickly. As good of a thing as it sounds like it is, it's a bad idea to have money become more valuable just by holding on to it. Inflation creates an incentive to invest your money back into the economy, and while rampant inflation is almost always bad, a small amount of predictable inflation is a good thing if kept in check.
So inflation does not hurt you as much as you think. There's a reason why 0% inflation is not thought to be optimal.
Because money sitting in a box under your bed isn't doing the economy any good. We saw a lot of the productive gains that lead to total GDP growth in the 80s because inflating fiat meant higher (predictable, not stagflation) money velocity.
Having inflation, and a dollar losing value, is good because it means you don't want to just sit in the dollars, you spend them on things and keep moving them around the system. You instead invest your money, and optimally have stocks or business interests using your money to make you returns while keeping the money circulating.
I don't think the problems with modern fiat are necessarily because you have inflating money - it is more that corrupt legal monopolies on counterfeiting will funnel new money into a select few, while the printing is hurting everyone else. It is more the unequal rigged distribution of new funds than anything.
Of course, bitcoin is a great replacement for bonds or gold, because it inevitably is going to deflate when it has market saturation, no more btc is minted, but wallets are lost so the monetary base shrinks. So you can reliability predict it getting more scarce over time, and if everyone else agrees it still has value it would get more valuable too.
And on the flipside you have something like Doge or Peercoin, the former with fixed monetary base expansion of a fixed number of coins (which means the total inflation drops each year and approaches 0% when you have enough Doge that adding 5 billion coins a year is a small fraction of the total monetary base. I guess eventually it would reach equilibrium, where your money lost from lost wallets or people forgetting passwords matches money generated each year.
I think Peercoin is interesting because the inflation scales with the monetary base, so 1% more of all active coins is meant to be printed each year, so you have a near constant 1% inflation.
I also think there is room for a cryptocurrency with predictive analysis of the monetary base - if the velocity is low relative to the number of coins, it means you aren't inflating enough and people are sitting on funds. If the velocity is too high you are inflating too much and should cut back printing. It would be neat to see an algorithm to balance that, which is why in common economics something around 1% inflation in the long run is considered optimal.
However, the market hasn't been moving much lately. So maybe that's indication that the market doesn't think the IRS decision is terribly good or bad news? That fits with my perception that they were just explicitly stating what everyone assumed to be true.
Or maybe the market will crash tomorrow. Who knows.
Also, I only claimed that it was a semi-decent analogy. There are many differences between gold and Bitcoins.
Jewellery is tricky, because gold is not only used for its physical characteristics, it also 'feels good' to know that you have real gold jewellery -- which goes back to the 'perceived value/store of value' problem.