Horse puckey. These bonds were bought at a price that would make thier yeild negative at today’s inflation rate. The people that bought them expect inflation and expect to make money from owning them relative to other investments. It does show that they are willing to take a slight loss relative to inflation to find an inflation protected investment (I think they can’t make up for the -.55% even if inflation screams upward — they’ll always be a little behind inflation).
People aren't buying those bonds, the TBTF banks are. It safer, easier and less risky than lending money to businesses or individuals. After the elections the Fed will kick in QE2 and the TBTF banks will dump their trash at the Fed window and buy more bonds. At some points it explodes and there will hyperinflation the likes of which Weimar never saw. Don't be caught without a chair when this music stops.