tl;dr Economies need something safe to invest in with a decent return (more than inflation). Government treasury bonds provide that flexible safe haven. If T-b

tl;dr Economies need something safe to invest in with a decent return (more than inflation). Government treasury bonds provide that flexible safe haven. If T-bond interest rates are too low (a function of supply and demand), investors will avoid them and seek higher-risk investments, adding risk to the economy. So when governments run low/no deficits, there's no motivation for them to create bonds with attractive interest rates for investors. This raises the risk profile across the economy. Meanwhile, the private sector cannot be fully trusted to create safe, low risk investments. Remember the housing crash? That was the result of CDOs, a very clever derivatives game that indirectly coupled AAA mortgages to the worst subprime junk bonds. The private sector is full of very bright people who are paid lots of money to find clever new ways to game the system. That means it can all be gamed. So government-backed securities mean there's at least one honest(ish) game in town. The triumph of ideology over evidence, and "common sense" over deep thought, causes no end of economic problems. Austerity is common sense and ideology. Debt is bad, right? Except when you need a certain amount of government debt out there to stabilize markets. When investors are practically begging for government bonds to shelter them from the private sector storm and there are no bonds to be hand because the austerity police think the common sense thing is to reduce spending, they're actually making it worse, not better. They're leaving private investments out in the rain.