Unlike the stock market, the bond market thrives on "bad" news. Why is this? The main reason is the money trail. Investors are quick to move their money from stocks into bonds when something bad happens.

Yesterday we had plenty of bad news. The U.S. job market lost 467,000 jobs, a 26-year high. Now to add fuel to the fire, wages are dropping due to layoffs and shortened work weeks (WSJ subscription required). Fewer people are working, which means less money that consumers have to spend. That signals a slower economy.

Ben Bernake has initiated the biggest cash infusion in Federal Reserve history -- a stunning $600 billion dollars that has been put into the US economy.

How did he do it? The Federal Reserve has been buying Treasury securities, which creates a credit on bank balance sheets and thus adds new money to the banking system. This in turn allows the banks to use the money for loans and mortgages. Plus, the Fed has been active with offering US Treasuries at auction, which have been scooped up by eager investors. Just today the "bid to cover" in the Treasury auctions was 4.4 percent. That means that there were 4 times more bids than the securities offered on auction. Investors are seeking safety in US Treasuries and are willing to accept a near zero rate of return.

So is this strategy going to work? The problem is that individual buying of US Treasuries does little to stimulate the economy. What is happening is a shift from lower quality securities into the safety of US government backed securities. A devastating side effect of these actions is that it drives down the prices of other lower quality securities.

One may guess that eventually this excess cash will work its way back into the equity markets but for now we are in a holding pattern.

How'd you like to borrow money for 30 years at 2.95%?

The U.S. government can, and it's making it easier for the federal government to fund its increasing budget deficit, as well as help build the case for a large fiscal stimulus package.

Treasury prices continued to rise Tuesday, pushing the yield on the 30-year government bond down to 2.95% -- close to its lowest level since regular sales began in 1977. The 10-year note yielded 2.48%; the 5-year note, 1.47%.

Further, while it may seem like a contradiction to have long-term interest rates fall at a time the U.S. government is on-track to record at least a record $600 billion (and probably much higher) budget deficit this fiscal year, there's a method to institutional investors' madness, so says economist Richard Felson.

"The landscape for private investment is poor. We have a recession on all continents, and there's a lack of places to deploy capital productively. That dearth of opportunities for return on investment plus fear of losses from toxic assets is driving investors to the safer investments, and one of the safest is the U.S. Treasury," Felson said. "It's the preferred place to be until the major economies start to recover."

The government is printing money like there's no tomorrow and running record deficits. So why isn't inflation out of control? To answer that, we need look no further than Economics 101. When demand exceeds supply, prices rise and when supply exceeds demand, prices fall.

Up until July 2008, commodity prices were rising because institutions were able to borrow money to go long commodities and short the dollar. As a result, the demand for commodities exceeded their supply and prices rose -- contributing heavily to rapid inflation. For instance, oil rose from $24 a barrel in January 2001 to peak in July at $147 a barrel. But since then, this commodity trade has evaporated along with access to debt -- and oil now trades 70% lower at $43.

But this fall, there were some slight problems with the financial markets -- for instance, the government decided to let Lehman Brothers file for bankruptcy. This financial collapse has caused banks to clamp down on lending. And since consumers, which account for 70% of GDP growth, depend so heavily on borrowing to finance their consumption, an end to lending cuts way back on their purchasing power. So does their $10 trillion loss of housing and stock wealth in the last year. With the disappearance of debt, supply exceeds demand and prices tumble.

This is part of a series of columns by retirement expert Dan Solin. Please bring him your questions in the comments box and he will answer as many as he can.

Is this a good time to invest, or should you sit on the sidelines until the market has "bottomed out"? This is the most common question I am asked.

It would be great if there was a way to tell when the market had reached its low. If you could do this, you would be able to buy stocks when the markets were taking off and retreat to risk-free investments, like cash and Treasury bills, in down markets.

Unfortunately, the data on timing the markets is very dismal.

One large study looked at more than 15,000 predictions by 237 market timing newsletters over a 12-year period. At the end of the period studied, 94.5% of the newsletters went bust. Not very impressive.

The financial media likes to hype stories suggesting that the markets are tanking or are poised for a rebound. These predictions are usually inaccurate and generally unreliable.

Here's a better question for you to consider: Should you be in the markets at all?