Four weeks ago a ten-year Canada bond was yielding 2.96%. By today it had plunged by six-tenths of a point as investors stampede into the loving bosom of fixed income. US bonds, by the way, have seen their yields tank 30% – to the lowest point since ever. (The more demand, the higher the price and the lower the yield.)

So what? Well, if you own bonds, maybe as part of an anti-stress balanced portfolio, you’ve made money even as people with equity mutual funds throw up more often. The real benefit of bonds is not collecting interest, of course, but scoring capital gains.

Also, the rush into bonds probably means a drop in long-term mortgage rates (since that’s where five-year home loans, for example, are funded). The realtors still among us think this will revive a slagging housing market. They’re wrong.

By the way, a five-year mortgage can be had for as little as 3.24%, if you like borrowing from the back of a mortgage broker’s used Jetta. At the major banks, expect something a tad over 5%. And all of this could be headed down by as much as two-tenths of a point. More if this week sucks as bad as the last one.

Cheap rates are supposed to make folks horny to borrow and get stuff happening – that’s called ‘monetary policy’. But there comes a point when it doesn’t matter what the price of money is any more. And we’re there. (By the way, this is not good.)

If you care to look, we have evidence of this aplenty just to the south.

Mortgage rates in the States have hit a 50-year low, helping make houses the most affordable on record. Borrowers can get a loan at 4.1% with a rate which will remain frozen for 30 years, or a 15-year guaranteed rate of 3.3%. Not only are these cheaper than our banks are charging, but borrowers never face a renewal at higher levels and can deduct all the interest from their taxable incomes. And did I mention that houses cost, on average, half what we pay?

Imagine that. Cheap, deductible, non-renewable cash to buy real estate on sale. So what has this windfall done to motivate buyers?

Right. Nothing. Sales of previously-owned homes tanked last month, falling 3.5% to the lowest point in almost a year. Weak demand helped push prices lower, as well, off another 4% from last summer. Said one economist: “The low rates are doing absolutely nothing to stimulate the market for existing homes.” Or new houses, for that matter.

This is interesting – the mirror opposite of what we’ve been fed in Canada. Here the conventional wisdom is that so long as cheap money’s available, people will pig out, pay any dumbass price a greedy vendor asks and happily launch into a bidding war with an Asian dude or a crazy couple jazzed on house porn.

So why has cheap money failed there and not here – yet?

Most people living outside of this delusional dominion understand the tidal wave into bonds is the epitome of fear. Since Canadians have been relatively less impacted by the post-2009 meltdown, they seem to think we escaped. Big mistake. There’s no place to hide now as the global economy brakes and we enter years of crappy growth, structural unemployment, salary slump and debt rot. Americans realize this is no time to be borrowing. Will we?

Meanwhile USA families have seen the extent to which real estate can chew your butt off. It’s hard not to, when your house falls in value by a third and all of your wealth’s in it. Outside Chicago, in the distant suburb of Hampshire, building of 1,300 acres of new luxury homes stopped when real estate values crashed. But the town had already borrowed and spent $185 million for a new high school to accommodate the residents. Now the school board’s slashed its budget and shuttered classrooms in a place where plunging property values have destroyed the local tax base. Middle class America, mugged by housing.

The lowest mortgage rates in fifty years? Who cares?

In Canada, families are consistently and methodically misled about the strength and health of the real estate market and the nation’s ability to slip the noose of economic malaise. GlobalTV pimps for developers and realtors. F and Carney give Parliament no hint of storms ahead. CREA raises its estimates for sales and prices. Nowhere are average families, saving nothing, spending all, expecting normal, given distant warning of change. As Americans did in 2004, they feel their risk-free path in an uncertain world runs smack through a kitchen full of granite and stainless.

They don’t know what a bond yield is. But when mortgages shrivel by ten basis points, they hear about it on TV in a clip with a confident realtor and a smiling anchor babe.

But even that wears thin. The rising tide of volatility around us will take a toll. More people will reflect on what lies ahead, should wages or houses fail to climb without end.

The cost of debt, they’ll see, is not interest. It’s freedom.