“Today’s action, combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets,” the Federal Open Market Committee said in a statement after meeting today in Washington. “ After this action, the upside risks to inflation roughly balance the downside risks to growth.”

We guessed that the Fed would surprise us and do nothing. But 91 out of 108 economists interviewed by Bloomberg were sure that they would choose a quarter-point rate cut. They were right; we were wrong.

Not that it matters. Financial officialdom has already made itself clear: they’ll do whatever is necessary to keep this expansion going; the dollar be damned.

And so, the dollar was damned. Yesterday, it fell to another record low against the euro (EUR); it now takes more than $1.45 to buy a euro. Ouch! Shortly after the euro appeared, in 1998, it sank as low as 88 cents. Now look at it. Americans in Europe have lost half their purchasing power in just seven years, most of it because of the falling dollar; the rest because of rising consumer prices. Americans in America have lost wealth too; they just don’t know it yet.

Your poor editor is going to have to move to a cheaper place, a backward country where people don’t expect to earn much money, where property prices are low, and where you can still get a cup of coffee for less than $4. Hey, we can move back to the U.S.!

In Killen, Texas, you can still get a nice house for $150,000, or less. In Paris or London, that kind of money will get you nothing. And housing prices in the United States are going down. That’s what Alan Greenspan said. He told an audience that the housing problem was going to get worse before it got better. And he ought to know; more than anyone else, he caused it!

The latest Case-Shiller numbers tell us that housing is falling nationwide, as reported here yesterday. Guess where prices are falling most? In Tampa, Florida, where they’re going down at a 10% annual rate. Next in line is Detroit, where prices are off 9.3%. Overall, California leads the nation in house price declines, at a 5.7% statewide rate. The southern part of the state seems to be getting the worst of it; San Diego houses are down 8.3%.

Most likely, Greenspan is right; we’ve haven’t seen the end, nor the worst, of the housing slump. Why? Because there are a lot of houses on offer and few people with the money to buy them.

“America’s big, fat housing inventory,” is how Business Week describes it. There are 4.4 million houses on the market, a nine-year record. And it is taking three times as long to sell them as it did in 2005. Again, you can do the math later.

Naturally, mortgage defaults are rising. People get divorced. They wonder who will get to keep the family house. Then, they discover that the house is worth less than they paid for it, and less than they still owe on it, and neither one wants it. “I’m not paying that mortgage,” says one. “You’re not sticking me with that dump,” says the other.

The Fed was getting mixed signals, says Bloomberg . On the one hand, the property situation is clearly bad. On the other hand, exports are rising, the stock market looks healthy, and consumers are still spending. It could have stood pat but Wall Street wanted a cut. And who knows what financial catastrophes could be hidden in those derivative concoctions? If the Fed did not make a gesture to the financial industry, and something bad happened, it would get the blame. And why not? If the dollar continues to fall, well, isn’t that good for U.S. exporters?

The stock market celebrated with a healthy rise, up 137 points. But remember, dear reader, stocks are going up in Zimbabwe and Iraq too. We’re in a worldwide asset boom that has a clear and obvious cause. The Economist puts the rate of price inflation on “all items” (otherwise known as consumer price inflation) at over 16% per year. But member banks can borrow money from the Fed for less than 5%. You can do the math later, dear reader.

Of course, as the U.S. emits dollars, the rest of the world’s nations emit their own paper, trying to keep up. What we are seeing in the currency markets is merely relative, but important, degrees of badness. One currency stinks. Another is rotten. A third is crummy. A fourth sucks. They are all going down, but some faster than others.

What they are going down against is the things that don’t come out of printing presses or the imaginations of central bankers. According to the Economist, the average of these things... “all items”...is rising by more than 16% per year, against the dollar. But some things are rising even faster. Oil, for example. And gold.

Yesterday, the Fed spoke. And then, gold answered.

“We will not permit speculators to be crucified on a cross of strong dollars,” said the feds.

“Then, give us gold,” said investors.

Following the Fed’s action gold rose over $795 before the market closed. Then, the price shot up over $800 in the aftermarket.

“Falling dollar could push gold to record high,” says the Financial Times.

Where have they been?

Here’s good news, dear reader. The U.S. economy grew at a 3.9% rate in the third quarter. Numbers don’t lie, do they?

Ha! Numbers are the biggest liars on the planet.

Have you noticed how the whole world has been taken over by numbers? We live with them every day. They seem so precise, so confident, so sure of themselves. The U.S. economy did not grow “a little bit.” It did not expand “slightly.” It is not now just “somewhat larger” than it was a year ago. And it’s not even growing at a 3% rate or a 4% rate. It’s growing at a 3.9% rate.

The older we get, the more suspicious of numbers we’re becoming.

A man today knows his PIN number, his telephone number, often his fax number, his PSA number, his cholesterol number, his street number, his zip code, his Social Security number...digits, digits, and more digits! He’s likely to know batting averages of his favorite players and how much his portfolio increased last year, not to mention the standard numbers of a general education – how many states are there, how many members of Congress, what is the boiling temperature of water, what is the speed of light, how many times can you get a speeding ticket in the state of Georgia before they take away your license, and so forth.

Some of these numbers are useful. Many are empty frauds.

When the feds give us a number for GDP growth, for example, what does it mean? Why, it means the economy is expanding, growing, getting bigger. Oh, and what does that mean?

We apologize to long-suffering Daily Reckoning readers, but we will bring out a familiar example: If we cut our own lawn, the GDP is unchanged. If we hire a lawn-cutting service to do the work, the GDP expands. So, what does it really mean to say the GDP grows? In both cases, the end result is exactly the same: the grass has been cut. The only difference is that an amount of money, a number, has changed places, from our pocket to someone else’s. The world has no more money. The world has no more goods or services. The world is unchanged. So what does GDP growth really mean? And how could a precise number, 3.9%, ever hope to describe what has really happened?

To make matters worse, government statisticians, and corporate ones too, typically “crunch” numbers into the shape they want. Numbers get punched, beaten, hammered, bullied, and bamboozled. When the torture session is over they’ll admit to anything. That is how we get a “consumer price index” of only 3%...when everyone knows prices are rising a lot faster.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.