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Creating an Infinity Effect in Photoshop

Many of us have seen the visual effect that results from putting a video camera in front of a TV displaying the contents of the camera. The TV displays an infinite series of TVs within TVs - because it is displaying itself as the camera sees it displaying itself... over and over. How do we achieve this effect using Photoshop?

The General Approach

I will use a picture of a TV screen to demonstrate the infinity effect - let's outline the process by thinking in terms of the TV picture. First we duplicate the picture, then we resize it and fit it into the display area of the TV on the layer below it. We then take this overall new picture of a TV within a TV and repeat the above process. We essentially duplicate this new picture, insert one layer into the display area of the biggest TV on the below layer and repeat as many times as necessary. To actually execute these steps in Photoshop we must learn how to fit one image into another. We must also learn how to automate Photoshop actions, so that we would be able to automatically repeat the process of inserting pictures within pictures.

Step 1 - Setup

We begin by getting a picture of a screen:
Open the file. Photoshop has the ability to record every action you take and replaying it back whenever you like - we need to tell Photoshop to record everything we do from now. We control the recording of our actions through the "Actions" window, to show it go to WINDOW->SHOW ACTIONS. You will likely see a list of pre-recorded actions that come with Photoshop, they allow you to create complex effects by playing them back. To create your own custom action list, click on the "create new icon" button in the Actions window (it looks like a sheet of paper). Name the new action "Automation" and click "Record" - all your actions are now being recorded. Below is a picture of the Actions window.
Here is another picture, of my entire Photoshop work area. Notice a small red triangle pointing to the "Record" button, which is a round circle.
Now, go to SELECT->ALL, then EDIT->COPY and EDIT->PASTE. A new layer is created, identical to the current image.
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