Agreed interest rates are at an all time low. At the same time, the supply of loans is at an all time high, thanks to new (old) mechanisms like loan securitization being thoroughly commoditized.
Discuss - why shouldn't the price of loans (interest rates) be subject to the laws of supply and demand just like everything else?
They should be. It doesn't work though when the Fed comes along and buys the lion's share of loans.
A $1,000 1 yr bond is a promise to a $1,000 in 1 year. If you'd pay $500 for it than the interest rate is 100%. If you bid it up to $750 than interest rates drop to 33%.
If the Fed comes along and buys loans from the Banking system it increases the supply of loans... (banks are restricted by Basel Capital regulation in the supply of loans they can provide, otherwise too much liability money creation.)
If they buy loans from anybody else - since the Fed creates money to do so (by virtue of also being a bank), they again potentially increase the supply of loans, if the lenders then relend the money.
And the total quantity of debt goes up, its price goes down, and everybody wonders why.