The US Federal Reserve System’s expected interest rate path puts it on track to earn negative net interest income, which could have policy implementation and fiscal implications. Negative net income is made up by the outright creation of new reserves, which would push against quantitative tightening (QT) by directly expanding the Fed’s balance sheet. It also reduces the revenue of the US Treasury, which then must increase debt issuance. So how do the mechanics of negative net income work? And