This has almost always been the case. The government is a huge part of the economy and risk-free debt is a huge part of liquidity. It is boring but stuff like t

This has almost always been the case. The government is a huge part of the economy and risk-free debt is a huge part of liquidity. It is boring but stuff like the timing of payments matters. Paying taxes is a big, lumpy issue...and the reason the Fed came into existence was because of big, lump payments relating to the crop cycle (i.e. money becoming tight every year as banks lent to farmers...iirc). And before the 1980s (maybe the 70s), liquidity was the primary concern of policy-makers (you can go through FED minutes in the 1960s from ALFRED, the main policy tool was free funds). What happened is nothing to do with the level of rates. It is to do with the volume (and often the location) of liquidity (location because tax payments just go on deposit somewhere else, but it still causes a dislocation).