Let me try to reason out what is going on. On the one hand there we see very strong demand for safe assets: Short term treasury bills are safe because a) risk

Let me try to reason out what is going on. On the one hand there we see very strong demand for safe assets: Short term treasury bills are safe because a) risk increases w/ time period and b) they are backed by the US gov't which has a great credit rating and a decent economy to keep it solvent. Investors are willing to take moderate losses (-0.02%) on 3-month T-bills on the secondary market. They are literally paying the government for the reassurance that they will get 99.98% of their money back in 3 months. On the other hand, we are seeing very strong demand for risky assets: S&P 500 was at 2,120 in July, and has lost ~120 points since then but is still 400 points above it's pre-recession 2007 high of 1,560. "Some money managers say the global monetary-policy backdrop is supportive of riskier assets, many of which have become attractive after a selloff in the third quarter." It seems like the supply of money is much too high, and there is not enough demand (viable short-term investments) to soak up the supply. Perhaps if our economy was not so short-term greedy and consumption-driven, we would not be so worried about a few years of necessary savings and long-term investment which would lead to non/negative ROI in the short term, but long-term growth if done correctly. The funny thing is that both the US stock market and the US government bond market, while on opposite sides of the risk spectrum, are both powered by the same engine: the US economy -> US corporations -> US employees -> US education/nutrition/social services/infrastructure/defense. If this engine sputters, all investors will be in a world of pain - bond holders less so, unless the entire system collapses and their bonds become worthless. As the article states, investors are basically giving the government short-term loans when they purchase these T-bills. They have faith that the government will be able to earn some return on them (usually below corporate returns, and hence lower than stock-market interest rates), but that the government has some plan to generate returns nonetheless. So the government should be taking these loans and pumping them into the economy in the way that free market capitalism can't - long-term investments in the basic infrastructure of society. Instead the government continues to keep the liquidity taps open through QE as central banks around the world forge onward with massive asset purchases, putting more money into the corporate market while rotting government balance sheets. Summary: It's like the public and private sector are playing hot potato with an increasing number of hot potatoes. The private market does not want to forego short-term profits and is expecting the government to make the proper investments to spur growth. The government has its hands tied with social security, medicare, and defense spending as well as the debt ceiling, and is pumping money out to the banks with the hope that they will fund long-term investment. They keep going back and forth, swapping more and more money, but the only thing that happens is the distortion of free market prices and signals.