Did the Fed screw up?

We can see the Fed's dilemma in 2015, Treasury started borrowing heavily and excess reserves were leaving the system to chase the Treasury one year.

When excess reserves leave the system, Fed accounting treats this as a short term rate cut for government.

So, as a currency banker, the Fed wants to raise interest charges on loans. But all it can do is raise rates on deposits. By the nature of its accounting, the current Fed is forced into off equilibrium moves, mainly lowering rates to help Treasury rather than raise rates to hinder Treasury. It has one response, always, raise deposit rates to follow the one year. The seigniorage accounting rules have created a one color currency banker, it will always be in partial equilibrium. The Fed just maintains the sweet sot for government debt.

The Fed cannot rebel as government has a backlog of currency insurances contract in its inflation adjustments and cost plus contracts. Nothing gets fixed until Congress capitulates.