Money is more complicated once a credit system is levered on top. The Fed just creates the equity, or the base foundation basically, which banks then lever off of. Banks create unstable money, since it really is just claims on the money the Fed made, even if they make claims in excess of what they Fed has created.
What people don't realize is banks have made so many promises and there is actually a relative scarcity of dollars to fulfill those claims. The Fed has created about $3 trillion in liabilities, accumulating a near equivalent amount of assets (see image: http://gold.net/static/images/screenshots/Fed_balance_sheet_...), while the total credit in the system is closer to $60 trillion (see image: http://gold.net/static/images/screenshots/Total_credit_marke...). This means the economy as a whole is unsoundly levered nearly 20 to 1 as there are 20 times more claims on money out there than actual money exists to satisfy those claims.
When credit contracts there is a scramble for liquid money to meet credit obligations, but remember there is 20 times more credit obligations chasing every unit of liquid money. This is why the US dollar rises during credit crunches - a poorly understood phenomenon.
Prices won't rise out of control until there is a crisis of confidence in the currency. Hyperinflation is a confidence crisis, and usually Weimar style printing is what follows. Part of the Fed's printing is trying to quell the crisis of confidence in the short run, but their actions actually increase the risk of a confidence crisis. While they help lower the leverage the consequence is that they are monetizing the debt and making that debt more spendable. The better solutions is liquidating the debts as Ron Paul suggests, not making them realizable as the Fed is doing. The Fed is showing that debts are not paid out of production but out of printing which over time will diminish confidence in the system as a whole.
In hyperinflation cases the real money supply actually falls to zero, because despite a lot of notes in existence, they are accepted for nothing and have trouble circulating. The unsound leverage of the system can eventually trigger a quasi insolvency threat which will force those with debts in USD to abandon their post, rather than bother paying their dues with money that doesn't exist, or offering so much of their assets to acquire such money which is perceived to have no value after the fact. Those offering productive good have no price of dollars which they'd accept in exchange for their goods in hyperinflation. This begets money printing to try and persuade merchants otherwise, but at this point the only way to restore value to the currency is to tie it to production once again via something of value like gold.
If the Fed does monetize all this debt though, and we get 50+ trillion in the Fed's balance sheet, there will be a lot of upward pressure on prices. Keep in mind that bank's credit only exists to the extent someone is forgoing spending at least a portion of it. Money can't be spent twice without forcing banks into bankruptcy unless the Fed monetizes the bank's credit operations. The Fed still has a ways to go in this regard.
Another major point that must be considered is a lot of US dollar credit and printing has been shipped overseas. Many central banks abroad are tied to the dollar and are importing US inflation to restrain their own currencies from rising. In doing so they have huge local inflation problems, and have saved the US part of the symptom of their money printing.
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