Exactly. Downgrade all you want. At the end of the day, there is only one place to park the world's money that can handle the amount of liquidity in such a short time. We can all yammer on about the dollar and its status as a reserve currency, but what else but the US Debt market can handle such a flight to safety?
Jump in rates? Assuming you mean the long end, there is NO need for higher yield to entice when the Fed buys from the Treasury. We already have the steepest yield curve in history. Why would a bank lend when they can buy money at zero (demand deposits) or near zero (CD's and time deposits), and park it in 30 year T-Bonds? Without lending (credit expansion), this economy isn't going anywhere.
Because that would be assuming all sorts of risks that you might not want (i.e. duration and credit). Pretty much anyone can do this trade and, if it were free money as you suggest, I can't imagine why the curve would still be that steep.