As a follow up to my earlier piece on the shortage of safe assets, I direct you to Rebecca Wilder's post where she documents the broad decline of investment grade sovereign debt. As I mentioned before, this increasing shortage of safe assets matters because many of these assets serve not just as a store of value but as transaction assets that either back or act as a medium of exchange. In other words, this problem matters because it adversely affects the demand for money and therefore nominal spending.
One solution is for producers of truly safe assets, primarily the U.S. Treasury, to create more safe assets. Brad DeLong takes this view. This approach, however, worsens the Triffin dilemma for the world's go-to safe asset, U.S. Treasury debt. Another solution is for the Fed and the ECB to restore nominal incomes to pre-crisis trends. Doing so would spur a sharp recovery that would lower the demand for safe assets and increase the stock of safe assets. Both of these developments would reduce the excess money demand problem and avoid worsening the Triffin dilemma for U.S. treasury debt. See my previous post for more.