Today could be a big day. The Fed could make history - cutting rates down to zero.

So far, the feds have tried trillions worth of stimulation techniques. But the economy seems strangely indifferent. Unresponsive. Frigid, even. Every week brings more evidence that the animal spirits that are supposed to make it frisky and full of life are completely missing.

More layoffs, more bankruptcies, more frauds, more incompetence, more bad news…day after day…

Yesterday, for example, the Dow lost 65 points. And it was reported that houses lost more than $2 trillion of value in '08.

Today, the bad news keeps pouring in. The Commerce Department reported this morning that homebuilders slashed construction of new homes, pushing November housing starts far below the worst levels in 50 years.

What can the feds do? They've cut rates…they've bailed out…they've lent…they've bought…they've sent out checks. Altogether, the bill for all this stimulation is stretching up to $9 trillion. But so far, all this stimulus has gotten us nowhere.

But the feds aren't going to give up. No siree. They have no other theory…no other idea…no other concept than those given to them by Keynes, Friedman and Gon Spend, Cut Rates, Print Money.

Today, the Fed will cut rates - maybe 50 basis points…maybe the whole enchilada…the entire 100 basis points they have left.

Yesterday, we urged you to sell the dollar. We hope you followed our advice. The dollar is falling. It's at a 13-year low against the yen. And it fell to $1.36 against the euro yesterday. Against gold, it lost another $16, bringing the price of the yellow metal to $836…an 8-week high.

What a delight! Our Trade of the Decade is now in profit on both ends. 'Sell stocks, buy gold' has been our advice for the last eight years. This year, the 'sell stocks' half has done beautifully…but the 'buy gold' part looked a little tired. But lo and behold, cometh the Christmas season and Santa Claus comes around; gold begins to shine again. It is now UP for the year! Only about 1%…but at least it's in positive territory.

What else is up for the year? We can't think of anything. Once again, gold has come through. Ol' reliable.

And today, the Fed only has 100 basis points left. It will probably cut half of them. But it might go for broke by cutting all hundred. Never before has it cut rates to zero, but heck…never before has it been confronted with a global depression.

This is not just a recession and a bear market, says Bill Gross, this is a "transgenerational" downturn. Gross manages the largest bond fund in the world, PIMCO. He believes stocks are well priced. Measured either by P/E or the Q Ratio (price compared to replacement costs) U.S. stocks are at a historic low, he says, "implying extreme undervaluation."

This is not normal. But then, neither is the circumstance. Government is muscling into the economy…pushing out private business. Government borrowing will take up almost all of the world's savings next year. Next year will bring more regulation too. Cheap financing is gone…and the elites are turning against free-market capitalism and globalization. In this new world…government spending "crowds the private sector into an awkward and less productive corner," says Gross.

What is the appropriate level for stocks in this world, he wonders. Dow 5,000? He raises the question, but doesn't answer it.

*** Here at The Daily Reckoning we have a different theory entirely. It's not our invention…but we like to take credit for it anyway. We saw the crisis coming not because we have better eyes, but because we are able to stand on the shoulders of giants: Adam Smith, Adam Ferguson, Jacques Rueff, Friedrich Hayek, Murray Rothbard, Josef Schumpeter and Kurt Richebächer. Not that we've done a thorough study of the field. It's just that there is something so transparently superficial about the Keynesians and the Friedmanites…not to mention the Gonoists.

At the bottom of it, we don't think the economy works like a machine. You can't tinker with it to make it run better, in other words. You can't turn a screw to eliminate mistakes. And you can't trick consumers into thinking they have more money - at least, not without adverse and unexpected consequences.

No, in our mind, an economy is a living thing…organic…natural…subject to moral laws rather than mechanical rules. In our theory, people don't get what they want or what they expect…they get what they've got coming. Sooner or later.

Of course, that's why economists, government planners, and world improvers don't much care for our pensee. The clumsy mechanics have their own jackass theories; they stick with them no matter how many times they prove not to work.

*** A remarkable issue of Newsweek offers advice to the President-Elect:

"How to Fix the World" promises the cover.

What makes the magazine remarkable is that it has managed to put between its covers more claptrap ideas and silly 'blah, blah' humbug than we ever seen assembled in one place.

Of course, you know what's coming when you read the headline. If you're going to "fix" the world, you must believe that there is something wrong with it…and that if the Obama Administration would listen to the editors of Newsweek, it would be improved. We know you can fix a fight…or fix an election…or even fix a flat tire. But whenever people want to fix the whole world, they are looking for trouble. What they really mean is "change" the world - bend it into a new shape, more to their own liking…but hideous to everyone else.

"The world needs smart management," say the editors. No kidding. That's shows the height of bar Newsweek editors set for themselves. But what is "smart management?" And why should tomorrow's managers be smarter than today's?

And how is it possible to manage the world anyway? If the editors would only reflect for a minute they would realize that so far the "management" of the global economy has been disastrous. The last thing the world needs is more of it.

"Foreign policy requires adult supervision…" is another of the newspaper's empty bon mots. Who do they have writing this stuff, we wondered? Tom Friedman maybe.

Then, in a piece entitled "How to save democracy" the authors suggest "technical assistance" and "training programs" setting "clear conditions" before the United States gives away any more money. They think that if foreign governments promise to work on "women's rights" and "transparency," the world will be a better place.

Tom Friedman must have had a hand in this, we conclude. It is all so childishly simpleminded. 'Democracy is a good thing,' the editors must have said to themselves, 'What can we do to get more of it?'

You see, dear reader, it's the same kind of drivel that you find in economics. 'Credit is a good thing; how can we get more?' Or, 'consumer spending makes the economy grow; how can we get consumers to spend more?'

The Newsweek team even offers to "fix Islam." Again, we didn't know there was anything wrong with it. But here is where we begin to get in the spirit of this whole world-fixing scheme. It's a shame they don't turn their attention to Christianity. How could that be fixed, we wonder? For example, maybe the 10 Commandments could be lightened up, so as not to exclude so many people. How about just 8 Commandments…or 5…so they are easier to remember? Or, how about "Thou shalt not commit adultery very often?" Or, "thou shalt honor thy father and mother except when they are annoying?" See how easy it is to improve someone else's religion? Maybe they could go right to the heart of the Christian dogma and improve "Love Thy Neighbor" to "Like thy Neighbor." That would make the whole thing a lot easier to live with, don't you think?

Now that we're in the mood to fix the planet, we will take up Newsweek's next challenge with greater grace. Yes, dear reader, the magazine wants to fix relationships between men and women. They don't seem to like it when women wear those black outfits that cover them from head to toe, for example.

Now here is where we can make common cause. We don't like those black outfits either…except on women who look dreadful. But we don't know which women look dreadful and which don't, so we will make a suggestion; let's fix this black bag thing with the following edict: women's clothing should be inversely proportional to their age and beauty. The more young and attractive they are, the less they should wear. There…that should help!

And while we're at it, we humbly and respectfully propose a simple code of 'rights' for women: women should be able to do anything men can do…only better. Except chew gum in public…we draw the line there. We hate to see a woman chewing gum…or swearing. Women should never swear; it makes them sound like low-bred washerwomen. Also, since we're taking the initiative here, women should wear dresses. We know this will seem a bit retrograde, but sometimes you have to go back before you can go forward. We like to see women in dresses, and we are sure it will be a better world if women wore dresses…except, that is, for the women who wear black bags.

But we're probably going a bit far afield from the world improvements the Newsweek team had in mind.

Let's return to their agenda.

"Markets can't rule themselves" says Joseph Stiglitz. We need "better regulation," he says. Now there's a novel idea. The SEC was set up by the Roosevelt administration 70 years ago. They were actually watching over Bernie Madoff's company…and actually did a review of it in 2005 and 2007. Somehow, these ace regulators didn't notice the biggest Ponzi scheme in world history…a scheme approximately 5,000 times bigger than the scheme of the eponymous Ponzi himself.

Better regulation? We know how to get more regulation. But what we don't know is how to get better regulation. We don't even know what it means. There were thousands of regulators on the job in New York City. Not one of them seems to have caught on to any of the great scams that were going on. Even when they were so obvious even we poor scribblers here at The Daily Reckoning warned about them for years. We said sub-prime would be a disaster. We told the world that hedge funds were a rip-off. We whined about high executive salaries and bonuses. We explained how the profits going to the financial industry were an aberration. We laughed at the pretentious nonsense of the investment engineers, the pious complicity of the rating agencies, and the reckless greed of the mortgage lenders. Housing…finance…private equity…hedge funds…the dollar - what did we miss? And a subscription to The Daily Reckoning is free!

Newsweek presses onward in its delusions:

"More government is the solution" says Brazil's President Lula da Silva. The solution to what? We would like to know what problem - that was not caused by government itself - has ever been solved by government. We can't think of any. But so the magazine lurches on…from one bit of claptap to another…from mass delusion to popular fantasy…from farce to dada.

*** Poor George Bush. At a press conference in Iraq, a journalist called him a dog, in Arabic, and then threw his sized-10 shoe at the president. Dubyah ducked.

What's wrong with America's journalists, we wonder. Have they no shoes?

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