sogon: Good example. One problem: there is no inflation yet!
Let me extend the story some. After you buy your DVD player, your neighbor wants one too. But there aren’t enough DVD players around. So he offers to pay you $200 to get it. (He gets the $200 by borrowing from FED). You sell it to him for $200. (if you want, you then payback your $100 to FED).
Now that is inflation! $200 is chasing a DVD player that was $100 before due to excess demand over supply.
