The Fed employs a group of BOND TRADERS to buy and sell bonds on its behalf. If the Fed wants to increase the AMOUNT of money in the economy, it directs its traders to buy bonds. This money will end up in banks that, in order to profit, will lend the new money. If the banks want to lend the new money, then they will have to lower the price of credit-interest rates. The process is SUPPOSED to WORK in reverse, too; when the Fed wants to decrease the amount of money in the economy, it sells bonds, thus taking money out of the economy.

The Fed employs a group of bond traders to buy and sell bonds on its behalf. If the Fed wants to increase the amount of money in the economy, it directs its traders to buy bonds. This money will end up in banks that, in order to profit, will lend the new money. If the banks want to lend the new money, then they will have to lower the price of credit-interest rates. The process is supposed to work in reverse, too; when the Fed wants to decrease the amount of money in the economy, it sells bonds, thus taking money out of the economy.