" inflation is two-fold. Firstly, the Fed pushes new reserves into the system via the OMOs (i was told this was a purchase of sort type of bank holdings for the most part) in order to try to bring the FFR (federal funds rate) down. Secondly the ‘commercial banks pyramid loans on the basis of those reserves.’ So normally if the Fed increases the monetary base (not typically notes and coins but more commonly by increasing the total quantity of reserves in the system held on account with the Fed itself) by 100 billion you might expect an actual expansion of the overall money supply of maybe 1 trillion (in a very simple example)."
found here the actual procedure of creating money (alt thread)"
according to this post-reply i received the federal reserve conjurs up currency (a credit form - non paper or coin) and purchases often shakey bank assets. with the old bank assets in the hands of the federal reserve the ‘new money’ now with the banks cheapens the cost of money; ie, the interest rate.
i cannot say for sure how the assets aquired by the federal reserve (if true) are paid down…reducing the amount of overall ‘inflation’.