The Federal Reserve is breaking all kinds of records these days. Its balance sheet has swelled to more than $2.9 trillion and will reach new highs in 2013 as the Fed purchases $85 billion a month in Treasury and mortgage-backed bonds.

The growth of its holdings in turn is causing the central bank to remit record amounts to the U.S. Treasury. On Thursday, the Fed said it sent $89 billion back to the government in 2012, the highest ever. It's a strangely circular arrangement: the government pays the Fed interest and the Fed pays...