Fed to Include Money Funds for Reverse Repos (Update1)

The Federal Reserve Bank of New York said it will expand the number of counter parties used when the central bank begins to drain the record amount of cash added to the financial system to include domestic money market funds.

Questions posed by Jim,

1. What exactly does the Fed wants to repo to money funds. The recent initiative was for the junk it had bought from the failing banks.
2. They might believe Jobless Recovery and New Normal but any attempts to drain will be met by a surge in interest rates and a lower low in the economy. That makes draining impractical in a political sense.

In conclusion:
There is no PRACTICAL means of draining the huge liquidity injected into the system.

I fully agree. There is no practical means to drain anything of size because the costs outweigh the benefits of doing so. The New Normal, the jobless recovery, means the same thing it did in 2002-2003 - a slow but steady redistribution of the general standard of living from West to East.

Source: businessweek.com