Fed reserve and the Mandrake mechanism:

Types of inflation:
1. Demand-pull - demand outpaces supply. This would not be expected to persist over time due to increases in supply, unless the economy is already at a full employment level. ...increase in output will eventually become so small that the price of the good will (have to) rise.
2. Cost push - rise in core goods or services, e.g. oil crisis in 70's; it is argued many prices are sticky downward or downward inflexible (thus when money supply decreases, these prices do not decrease. What are potential factors? a) Money reserves? Corp. pulls money from investments/slows new developments to make up for lost capital/profit. b) Decrease in production? Corp. lays off workers and shuts down least cost-effective factories, mitigating decreasing sales, i.e. go with what's most profitable. But does this cycle ever see its end? Is that why these short-term solutions pan out? That is, corps. ride the waves of recession with these two strategies instead of decreasing price of their good. Whenever you hear recession you hear layoffs, falling investments, RARELY deflation, and only starting with non-core goods, e.g. clothing, or goods with highest profit (can afford to decrease price) and not directly linked to raw materials, e.g. pharmaceuticals.)

-So far this year, consumer prices are rising at an annual rate of 4 percent, compared with a 4.1 percent increase for all of 2007.
-Energy prices are rising at a 16.5 percent annual rate.
news.yahoo.com/s/ap/20080613/ap_on_bi_go_ec_fi/economy

United States Notes vs. Federal Reserve Notes:
www.fdrs.org/federal_reserve_system.html

Foreign govts. own $2.2 trillion of U.S. debt, rising from 15% to 46% of debt since '86; U.S. pays $300 B/yr interest on debt:
911review.org/Media/National_Debt.html

Unemployment thru the decades:
www.digitalhistory.uh.edu/historyonline/us34.cfm