The funds rate is a target. Buying and selling securities (all Treasuries in practice) with money center banks is how the Fed tries to influence the funds market to attain the target, which is rarely exact but usually very close. The Fed has a list of the actual daily funds rate somewhere on its site. I looked at that list some time ago and saw nothing unusual, so I have no other explanation than a flood of overseas money, but I'm always open to new explanations that don't start and end with "it was a dot-bomb scam" from people who watch too much TV.
Yes it is.
Buying and selling securities (all Treasuries in practice) with money center banks is how the Fed tries to influence the funds market to attain the target, which is rarely exact but usually very close.
Actually, they use repos and reverse repos to influence the Fed Funds rate. To increase the money supply they buy treasuries and keep them in their portfolio. They increase the balance the selling bank has on deposit at the Fed. The banks earn no interest on these deposits and so have an incentive to quickly take that money and loan it out. If the reserve requirement is 10% and the Fed buys $1 million in treasuries, that will increase the money supply a maximum of $10 million dollars.
So, before the Millennium the Fed bought a lot more treasuries than it normally would have and boosted the money supply. After Jan 1st, they sold some of those treasuries and reduced the money supply. They created too much and helped feed the tech bubble and then shrank the money supply too quickly and helped cause the pop.