At one time money did not exist in society. Goods and services were exchanged by the barter system. For example, if I were a farmer and you were a cobbler, we would mutually determine how many bushels of my crops you wanted in exchange for a pair of shoes. This was not an effective system.
To answer your question, though, the money needs to be invested in the banks because commerce depends upon credit, even for a period as short as 30 days. In the current crisis banks are very reluctant to extend even short term credit, so the economy as a whole is slowing and unemployment is rising. Both of these conditions are undesirable, and occurred during the Great Depression. Investment in the banks is one means of preventing a depression from occurring again. And when the economy regains its health the value of the pension funds should return to former levels.
To answer another question - the salaries and bonuses paid to some executives are obscene. No, they are not worth the salaries they are paid.
Lastly, I do not see, as you put it, a "tsunami of inflation" because of the bailout. The inflation we are seeing now can be traced back to a great extent to the rising prices of oil. Regardless of the outcome of the bailout measures, prices for many goods will continue to rise if oil prices rise.