need to shut up a coworker about the fed reserve

Your friend said, "Inflation is an increase in price in products imported to this country and if you can't tell me what actually causes prices to go up in an inflationary manner and NO the answer is not by printing money.. It has to do with price wages and commodities prices."

1st: He is mistaking the effect for the cause. He defines inflation as the rise in prices when in fact it is the expantion of the money supply. The definition was changed to hide the real culprits, the Federal Reserve and fractional reserve banking.

2nd: This monitary inflation coupled with tariffs, price fixing, subsidies, and other forms of government intervention in the markets has the effect of creating booms and busts where labor and capital resources in the economy are redirected from their most efficient use based on market demand to projects where they will be wasted. False signals are created in the market which causes businesses to overextend themselves and quite often go bankrupt as we are seeing today.

So, on the one hand you have the devaluation of the currency through the expansion of the money supply by the Federal Reserve and fractional reserve banking; and on the other hand you have the other forms of government intervention. They both have the effect of distorting the market price system which is necessary for entrepreneurs to efficiently allocate the factors of production in the economy. Businesses overextend themselves, and resources are wasted and diverted from where they are really needed. You also have more dollars chasing after fewer goods.

Your friend also said, "And remember we are an exporter country of goods..and an importer of huge amts of commodities."

A country only exports so it can import; or, to put it another way, we pay for our imports with exports. As our manufacturing base is essentially destroyed, what we are primarily exporting today is our federal reserve notes. The world has been accepting our devalued dollars for the real goods we import from them. If we have nothing to sell them then they accumulate our dollars. In a way your friend is partially correct; as long as they hold our dollars instead of dumping it back into our system, they absorb much of the price increase we would experience here from the expansion of the money supply.

What You Should Know About Inflation by Henry Hazlit (1960)
Excerpt:
Chapter 1. What Inflation Is

"No subject is so much discussed today—or so little understood—
as inflation. The politicians in Washington talk of
it as if it were some horrible visitation from without, over
which they had no control—like a flood, a foreign invasion,
or a plague. It is something they are always promising to
"fight"—if Congress or the people will only give them the
"weapons" or "a strong law" to do the job.
Yet the plain truth is that our political leaders have
brought on inflation by their own money and fiscal policies.
They are promising to fight with their right hand the conditions
brought on with their left.
Inflation, always and everywhere, is primarily caused by
an increase in the supply of money and credit. In fact,
inflation is the increase in the supply of money and credit.
If you turn to the American College Dictionary, for example,
you will find the first definition of inflation given as follows:
"Undue expansion or increase of the currency of a country,
esp. by the issuing of paper money not redeemable in specie."
In recent years, however, the term has come to be used
in a radically different sense. This is recognized in the
second definition given by the American College Dictionary:

"A substantial rise of prices caused by an undue expansion
in paper money or bank credit." Now obviously a rise of
prices caused by an expansion of the money supply is not
the same thing as the expansion of the money supply itself.
A cause or condition is clearly not identical with one of
its consequences. The use of the word "inflation" with these
two quite different meanings leads to endless confusion.
The word "inflation" originally applied solely to the
quantity of money. It meant that the volume of money was
inflated, blown up, overextended. It is not mere pedantry
to insist that the word should be used only in its original
meaning. To use it to mean "a rise in prices" is to deflect
attention away from the real cause of inflation and the real
cure for it. (emphasis added)
Let us see what happens under inflation, and why it happens.
When the supply of money is increased, people have
more money to offer for goods. If the supply of goods does
not increase—or does not increase as much as the supply
of money—then the prices of goods will go up. Each individual
dollar becomes less valuable because there are more
dollars. Therefore more of them will be offered against,
say, a pair of shoes or a hundred bushels of wheat than
before. A "price" is an exchange ratio between a dollar and
a unit of goods. When people have more dollars, they value
each dollar less. Goods then rise in price, not because goods
are scarcer than before, but because dollars are more abundant."

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Related Post
"Webster's Dictionary" caught changing definitions - paul4won

At least partially.
There are truths to what he is saying, he just misses on the long term consequences of his choice, just like most lefties. Do not respond in kind with half truths that damage your credibility. This guy is not stupid, just mistaken. If he knows more than you take the opertunity to learn from him and research it yourself.
If you try to "SHUT him up" you are doing no one a favor except maybe your ego, and that only if you win which is doubtful, at best.

What is wrong with inflation is that it is regressive tax. That is, it hurts the poorest the most. You can think about it in simple terms. Inflation is the taking of value away from those who do not have assets and giving it to them that do. If a person needs to save 20% for a down payment on home, and that house rises in price 3-5% a year it will be nearly impossible to keep up with with the price of the home. This is where Interest only loans came in. It was meant to help the poor get a head of inflation, and money into hands of bankers. But what it did was instead create a false bubble.
This is what Ron Paul calls unintended consequences.
The other side of the coin is that you need discipline people in Govt to make sure inflation never gets to high and spending stays uncontroll.
This just simply does not happen. It is just as bad as some left wing hope that the world will live in some Utopian communistic society. It will never and has never happened.

a little something I wrote up a few days ago in response to an email I had received:

Because the States gave the power to coin money to the federal government and denied it to themselves, and since they also imposed upon themselves a requirement to accept only gold and silver Coin as a Tender in the Payment of Debts, government paper money cannot exist. However notes of the Federal Reserve System, which is not part of government, were made legal tender by the Coinage Act of 1965, specifically Section 31 U.S.C. 5103:

"United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

So, in spite of efforts early on to ensure sound money for America, the friends of paper money eventually got their way. Since bad money chases out good, the "United States coins" referred to above are in reality tokens which have masqueraded as US coin since 1965.

Constitutional Tender Acts seek to break this monopoly of paper money and token coin:

http://www.sicm.com/constitutionaltender/template.htm

In response to your query "do you know why we need a change to legal tender and how changing the status quo will benefit the USA? I would say that it can only be of benefit to rid ourselves of a system that slowly but surely destroys civilization.

Just shut up about it and stop trying to teach that fucking idiot. Let Him and His family starve for His stupidity. The time You waste on that total waste of sperm You could have woke up 2 other people. I talked till I was blue in the face for 1 year before the people I work with started listening to me. They understand what I am saying but they don't understand the scope of what is happening. Now I handed two people the Obama deception and guess what their eyes opened up in 2.5 hours... After they watched that they started watching other videos about the federal reserve and on 9/11. The point is people will listen but sometimes it takes a good video with NEWS clips to truelly wake them up.... So stop wasting Your time because that person is lost and totally stupid and deserves whats coming to Him. The reason I say He is stupid is because He does not hunger for truth and can't admit He is wrong just like 90% of the rest of this country caught in groupthink mode. The best part about it though is when they are out of work or they have lost everything with inflation then they will wake up.

At the Pentagon, on 9/10 Rumsfeld announced they had misplaced a few taxpayer dollars ($2.3 trillion, give or take a few). The part of the Pentagon that got hit by the "plane" happened to be the section gathering evidence for prosecution. The same thing the SEC was doing at Building # 7 WTC, the SEC was investigating corrupt business interests, including Enron (Bush was involved), the Carlyle Group (Daddy Bush) and the list goes on. Most investigators understand the hazards of dying by plane while working in the office. A recent occupational hazard.

http://www.youtube.com/watch?v=xU4GdHLUHwU