General info: http://library.mises.org/books/Henry%20Hazlitt/Economics%20in%20One%20Lesson.pdf
Big picture about govt’s and central banks: http://library.mises.org/books/Murray%20N%20Rothbard/What%20Has%20Government%20Done%20to%20Our%20Money.pdf
How the Fed works: http://mises.org/media/4390/Money-Banking-and-the-Federal-Reserve?ajaxsrc=video
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The Fed buys assets they banks own at very profitable [for the banks] prices, aka making an offer the banks cannot refuse. It pays for what it buys from the banks with newly printed paper or digital money.
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The banks lend the money either to businesses or to the govt, and they spend it. By the law of supoply and demand, the greater the demand for what the businesses or the govt buys [and there is greater demand because there is more money available to buy the stuff now], the higher the price. Those who sold stuff to the businesses or the govt now have more money at their disposal, increasing their ability to demand, thus increasing the prices of whatever they will be buying. And so the money passes from hand to hand, raising prices as it goes.
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This is a bit of an advanced subject, called the Austrian Business Cycle Theory. I don’t know which is the best introductory book or article or video to this fascinating subject. Look around in JJ’s mighty lists.