The want to stimulate the economy, so they drop rates. This means loans cost less so people are more likely to take a loan and build a factory or whatever. This I understand. However, doesn't the Fed also control how much money is in circulation by buying or selling bonds? How does this work? They bid high on t-bills, thus drawing money from banks? Why do the banks have to sell? And wouldn't they have to pull huge amounts in to make any difference?