Fed Asset Holding and the Deficit: What's $900 Billion Between Friends?

There have been several news accounts in recent days of plans for the Federal Reserve Board to reduce the amount of assets on its balance sheets. It currently holds close to $4 trillion in assets as a result of the quantitative easing policies pursued to boost the economy in the years following the collapse of the housing bubble. It is now making plans to reduce these holdings.

One implication of this reduction in holdings would be a lower amount of money refunded to the Treasury each year. T...