In case of a deflationary economy (unlikely imo), wouldn't Treasuries' yields adjust and still be as widely accepted and safe as they are now? Huge amounts of cash are an extremely risky way to hold liquidity in general, and much more so in a deeply depressed economy. There is simply no way to insure that much money against a potential bank bankruptcy or for banks to hold it without parking it anywhere.
The Fed action today suggests that they do not think a credit crisis is unlikely. And while it is true that big corporations and players in money markets don't hold a lot of actual cash, it does seem to be the case that every asset class is getting punished, and that is actually kind of weird.