With such cheap borrowing, some say the bond market is encouraging the U.S. government to borrow more and more money.
"The bond market is not imposing discipline on us as borrowers," says Kim Schoenholtz, professor of management practice at NYU's Stern School of Business. "Often countries are compelled to [consolidate] when markets charge them a risk premium. For the moment markets are not charging the U.S. a risk premium."
One example of just how little the market has punished the government: when last summer's debt ceiling debacle led to an S&P downgrade on the U.S. sovereign debt rating, 10-year Treasury yields fell in subsequent days.
That makes no sense.
It doesn't seem to, but Treasuries are competing against a wide range of other investments.
"If returns on other assets are not doing well, and if there's a flight to quality, you can have Treasury yields drop. Even if U.S. Treasuries get downgraded as they did in [last summer's] episode, it's all 'Compared to what?'" says Schoenholtz.
Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via E-mail at firstname.lastname@example.org.
Corrected on 5/23/12: An earlier version of this article misstated the amount earned on a Treasury note yielding 1.8 percent, which is $1.80 annually.