I was not saying that the Fed mandate says that the fed must do this. I was challenging YOU who said that investors should consider treasuries capital preserving and default risk free. Neither is true-- inflation rate is meant to characterize the buying power of dollars. Whenever inflation rate exceeds the overnight interest rate, then the purchasing power of anyone holding cash or short term treasuries is by definition losing principal in a guaranteed way. Defaulting on a pure fiat system is also basically pointless, dollar denominated debts can always be met with money printing, so inflation is really the only way a default happens. And we did actually default in 1971 when Nixon ended convertibility of dollar to gold.

> When investors are very scared it happens that they get very defensive and pay the Fed govt. for the privilege of parking their money in US Treasuries.

I think you have something inverted here in your understanding (unless you are talking about negative interest rates?). You pay to borrow, you get to collect interest if you park capital. If you want to park money in US treasuries, that's a long treasury position and the government is paying you for the privilege of being able to use your dollars for a while. How it would work is you start with your asset (say a stock) sell that for dollars, then sell the dollars for a treasury, which pays a coupon upon maturation (gives you back more dollars than it started). So investors with a parked cash position are not paying the government, the government is paying them. When there is a panic, I agree the demand for treasuries goes up, and that is why you see the long term rates go down-- as demand for treasuries goes up, they start to be auctioned at a lower premium. The only people paying the government interest on the treasuries are those who are borrowing money, for example banks.