Excellent points and you're PROBABLY right.

But for me, that's not good enough. Its easily good enough for risk assets, sure. But not nearly good enough for a safety shield which, for me, is what Government Fixed income represents. It's my nuclear bunker. And that, I believe, is generally what treasuries represent for US investors.

Your scenario plays out wonderfully and, as you point out, feeds upon itself in a seemingly endless virtuous loop. Until it doesn't.

And one day when for whatever reason enough people/government/institutions say "hey, that yield is inadequate-I demand more" it can weaken and collapse. The dam breaks. There are MANY ways a collapse trigger could come: Fear of runaway inflation, a sudden awakening to the danger of a debt to GDP ratio off the charts, a loss of reserve status for the dollar, and when it happens you realize the entire system is bult on CONFIDENCE and when that is lost people behave in a herd mentality and they RUN ...and demand for treasuries dries up.

Bell curves of outcomes are not what I'm looking at. I'm looking for the events above and below that belly. What Talib, Marks, and Buffett look at it. Those are the smart guys. Buffett won't go out more than a few months--really weeks. These guys don't predict. They PROTECT.

Extending here is risky, in an arena designed to protect against risk. A Black Swan event in extended maturity treasuries is really not even that black swanny. Unlikely? sure. But not farfetched at all. Unlikely is not nearly good enough for me.