The Federal Reserve's massive annual profit, which it turns over to the Treasury, is likely to dwindle and may even disappear entirely in a few years.
But that's okay, Fed officials say.
After years of record profits, the Fed is likely to be saddled with losses starting in 2017 or 2018, economists predict in a paper that was presented Friday at the U.S. Monetary Policy Forum, a New York conference organized by the University of Chicago Booth School of Business.
Here's the scenario they think will play out: As the economy improves, the Fed will eventually tighten monetary policy. The central bank will stop buying mortgage-backed securities and Treasuries by the end of this year, they believe, and start raising interest rates in 2015.
Eventually, the Fed will have to start selling off the massive collection of bonds it acquired in its stimulus efforts.
And when that time comes, even the Fed admits that it will probably incur losses.
Inside the Fed's finances
Unlike most government agencies, the Federal Reserve funds itself. Its expenses are not paid for in by U.S. federal budget.
Each year after paying its own bills, the central bank hands over all its remaining profit to the Treasury Department. Most of the money comes from interest earned on holdings like Treasury bonds and other debt.
Those payments have ballooned in recent years. The Fed is earning huge profits from the large bond portfolio it amassed (and continues to amass) during its stimulus efforts.