Look at the max timelines:
It seems to me that inflation/deflation is not the motivating factor, but only the choice of risks. Where should one put gobs of money? Of course, the markets are an option, but the risks there seem terribly high. So, there is competition to put gobs of money in bonds, which drives rates down. People don't want low rate bonds, but those are the bonds that you get when they are in demand.
Even lower rates aren't going to drive cash into the markets and result in economic healing. They are only going to add more air to bubbles that already are making people wince in nervous expectation.
There's a famous piece of journalism on the causes of the ~2008 financial crisis, specifically the housing bubble, called The Giant Pool of Money. There's one part that always stuck out to me, and seems incredibly relevant here, so I'll highlight it [emphasis mine, at the end]:
Right, the global pool of money, that's where our story begins. Most people don't think about it, but there's this huge pool of money out there, which is basically all the money the world is saving now-- insurance companies saving for a catastrophe, pension funds saving money for retirement, the Central Bank of England saving for whatever central banks save for, all the world's savings.
A lot of money, it's about 70 trillion.
That's the head of capital market research at the International Monetary Fund, the place to go if you want to figure out how much money is in the world.
And by the way, before you finance enthusiasts start writing any letters, we do know that $70 trillion technically refers to that subset of global savings called fixed income securities. Everyone else can just ignore what I just said. Let's put $70 trillion in perspective. Do this. Think about all the money that people spend everywhere in the world, everything you bought in the last year, all of it. Then add everything Bill Gates bought, and all the rice sold in China, and that fleet of planes Boeing just sold to South Korea, all the money spent in every country on Earth in a year. That is less than $70 trillion, less than the global pool of money.
We're talking about a lot of money.
That is a lot of money.
And that money comes along with armies of very nervous men and women watching over the pool of money. Investment managers, they don't want to lose a penny of that. They don't want to lose any of that money, and, even more so, they want to make it grow bigger. But to make it grow, they have to find something to invest in.
So, most of modern history, what they did was they bought really safe and, frankly, really boring investments like treasuries and municipal bonds, boring things. But then, right before our story starts, something changed, something happened to that global pool of money.
This number doubled since 2000. In 2000 this was about $36 trillion.
So it took several hundred years for the world to get to $36 trillion. And then it took six years to get another $36 trillion.
Yeah, there has been a very sharp increase.
How does the world get twice as much money to invest? There are lots of things that happen. But the main headline is that all sorts of poor countries became kind of rich, making things like TVs and selling us oil. China, India, Abu Dhabi, Saudi Arabia made a lot of money and banked it.
China, for example, has over a $1 trillion in its central bank. And there are office buildings in Beijing filled with math geniuses, real math geniuses, looking for a place to invest it. And the world was not ready for all this new money. There is twice as much money looking for investments, but there are not twice as many good investments.