Tax Cuts, Treasury Bubbles, and Government Deficits

It's unpleasant waking up to read that some genius decided delivering more tax cuts is the way to stimulate the economy (especially if I voted for him). Cutting taxes is a lazy-politians most potent weapon, it doesn't solve anything but it makes the people happy. First off, lets review the facts. We know where the money from the last round of tax cuts went and we know how it was used. It went to the wealthy and was invested in mortgage-backed securities and hedge funds.

Tying up excessive capital in any one sector of the economy is a tell-tale sign the economy is in the midst of a bubble. 13Week T-bill rates have been near zero or even negative in recent weeks; ok, theres the tell-tale. So what effect will tax cuts for businesses and workers have on the economy? Presumably those living with reduced incomes (from working reduced hours) will use the savings to compensate for lost income, this effect will be delta neutral with regard to consumer spending. Those with the means to save (id est, those with an income to save) will do so. Consumer confidence is at record lows and there is little material incentive to spend (despite the massive reduction in prices across all industries). Where does this money saved go?

Not to the banks, at least not the bulk of it. If the market remains as weary of private investment in three months as it is now all that money will be invested (one way or another) into government treasuries--the safest thing money can buy. And now we have come full circle. The government borrowing from around the world (and some from at home) to provide tax cuts so that more capital can be invested in treasuries.

Whats the problem with this scenario? The first round of deficit spending will be consumer spending delta neutral, create zero jobs, and will make the well-off better-off. Just saying...