I’m no expert but I’ll take a stab at answering your questions:
– Where does this money come from? Who pays for it?
The money is essentially “printed” by the fed. Not actually, but what happens is the fed credits the account of a bank with the money and allows that bank to then spend that money. Effectively creating the money out of thin air. (Bet you wish you could do that, huh?)
– Where exactly does it go?
Wherever the bank spends it. Effectively, this puts more cash into the system. Or as is often said, more liquidity.
– What will it’s effect be on the value of the dollar?
Well, assuming that when the repo comes due, the bank will repay the money back to the fed, and take back the bonds it offered in collateral, nothing will really change. On the otherhand, if the fed, continues to renew the repo indefinitely that is the same as increasing the money supply and would have the effect of lowering the value of the dollar. (Note that in the last week the value of the dollar has risen while the fed has done this, thus world currency traders are believing that the value of the dollar is NOT falling)
– Who stands to benefit from these “injections”?
Well, everyone really. If the banks get into a situation where they do not have enough cash to function, all hell will break loose, there will be runs on banks, etc. So by adding this liquidity to the market, the fed makes sure that the banking system continues to function.
– Will this help or hurt our economy in the long run?
Well, making sure that the banks keeps function is beneficial, so think of it as avoiding seriously hurting our economy. But this action should not (at least theoretically) hurt or help our economy. Our economy is going where it is going. The fed could “juice” the economy by lowering the fed rate, but that is something they are currently not doing. Don’t confuse lowering the fed rate with opening the discount window.
– What will the effect be on housing?
Again, assuming that the banks repay the repos in a fairly short period of time, probably nothing. Bottom line to housing is that lots and lots of people have overextended themselves, and that’s got to be unwound.