Why is the Fed balance sheet filling up with short term treasuries?

The current rate is 1.54%, and the interest on IOER is 1.25%.  That leaves .29% to split between the Fed expenses and the government seigniorage.  Government maybe gets this new debt, on the margin, for 20 basis points cheaper than market.

It is a funny circle. If the excess reserves drop, government gets an implicit interest reduction, and should be piling on to take advantage until excess reserves build. Excess reserves leave to get the one year, which is a quarter point higher on the market. Excess reserves return to the sheet when the implied government taxes make the market unprofitable..

The short term balance between deposits and treasuries, is about 10 basis points plus the balance from the remainder of the balance sheet.  In other words, the remainder after interest paid and received, is the residual Fed expense, about 10 billion?, or 40 basis points over the whole 2.4 T.  The one year trade covers about 10 basis points of the cost.

I don't see government gaining a whole lot by piling up the one year in the Fed sheet.  Barely a quarter point gain from the market, all the Fed is doing is moving the staff depreciation cycle up and down the curve, making sure they get paid before Congress.