Question on Open Market Operations I have a very basic question on the somewhat cryptic Open Market Operations. So, from what I understand, say the Fed wants to reduce interest rates (increase monetary base). It will firs buy a bond by writing a cheque to the security holder, the cheque is deposited in a commerical bank, which then deposits this in the central bank. The reserve account of the central bank is credited, and the commercial bank is then able to use these "excess reserves" to create fresh loans- injecting money in the economy.
I guess my question is: when the issuer of the bond (say the government) has to pay back to the security holder (central bank), wont it decrease money supply then? 

Thanks!
Your question reversed the order... If the central bank issues the bond, its gets money (thus decreasing the amount of money in the system),
it pays the money back throughout a certain period of time, then money goes back to circulation
But by that time, the central bank can issue new bonds and repeat the process 

Essentially, central banks manages a balance
Of course the catch is it pays money it *invents *...