"... but I believe the Fed's thinking" is that those interest rates will draw back in some of the worthless dollars they've printed."
"Draw back in from where ?
To where ?"
The Fed has printed all these worthless dollars, either in real paper or in electronic money (which, sooner or later, becomes real dollars) and put them in the banks to be loaned out and used, whether to cover Federal dollars in peoples' pay, or retirement, or whatever.
Remember the three aircraft that Obama took to the Muslims with pallet loads of cash (1.5 Billion Dollars), to get the four hostages back and a "Nuclear Deal", and the rest of the 150 Billon Dollars of funds were transfer electronically to them..
Then later, when their story is that "we're in better shape economically", they raise interest rates to take back in, or remove from the economy, those worthless dollars they suddenly made out of thin air.
The Fed has printed all these worthless dollars, either in real paper or in electronic money (which, sooner or later, becomes real dollars) and put them in the banks to be loaned out and used, whether to cover Federal dollars in peoples' pay, or retirement, or whatever.And these short term repos are the Fed temporarily "printing" more dollars. Still not sure what you meant by "draw back in some of the worthless dollars"
Then later, when their story is that "we're in better shape economically", they raise interest rates to take back in, or remove from the economy,
Raising the Fed Funds rate doesn't reduce the Fed's balance sheet. Doesn't remove "printed dollars" from the economy. FYI, they just cut the Fed Funds rate on Tuesday.