If the Fed buys back issued securities (such as Treasury bills) from large banks and securities dealers, it increases the money supply in the hands of the public. Conversely, the money supply decreases when the Fed sells a security.
In other words, the government issues debt - a treasury note. (We'll make it simple - note is for $1,000 and pays .025% interest rate
A Bank buys that treasury note. In a year, they'll get $1,002.50 from the government. Th banks capital is tied to that note, and it cannot loan money on that note.
When the FED buys that note from the Bank - lets say they pay $1,003 for the note, that increases the money supply - because the bank now has cash that it can loan and has made a profit when it sold the note to the FED.
Similar to money for nothing and your chicks for free.
(Prostitutes and gals that were working at strip clubs suffered financial losses during the great recession, because the bankers stopped going to the clubs and hiring the prostitutes.)
America is great, isn't it?
Do nothing but make a profit by buying from the government, then selling to the FED at a profit.
Not allowed by u.s. citizens, but a con that Mr. Ponzi would have loved