What can the U.S. Treasury’s attempts to keep paying the nation’s bills tell us about the Federal Reserve’s quest to reduce its balance sheet after years of stimulus?

Quite a lot, according to Zoltan Pozsar, research analyst at Credit Suisse Group AG in New York. He suggests that by focusing on the ambitions of most Fed officials to begin reducing the central bank’s asset holdings this year, investors may be missing a crucial — often over-looked — role of the U.S. government in driving global money supply.

“Big is beautiful. Big is necessary,” Pozsar writes. “Learn to live with it.”

Because of a deal struck to avoid a debt-ceiling showdown during the presidential elections, the Treasury has been cutting its cash balances at the Federal Reserve Bank of New York, helping to boost liquidity and forcing a retreat in the metric the Bank for International Settlements recently crowned the market’s new