Today's announcement from the Federal Reserve marks the end of the road for Plan A (fighting the recession by lowering interest rates), and the beginning of ... what?

The Fed's announcement begins:

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

Although that caught the headlines, it's really the anticlimactic part. The actual fed funds rate and short-term T-bill rates had been well below the Fed's previous "target" of 1.0% for some time, making today's announcement little more than an acknowledgement that that's indeed where we are. At least we can all finally agree that further rate cuts from the Fed are completely irrelevant, if for no other reason than because it's physically impossible for there to be any more ahead.

Source: FRED.

The main

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The Federal Reserve used up almost all of its remaining conventional ammo today as it desperately tries to prevent the second Great Depression. The statement is below, along with the previous statement, and with my commentary interspersed."The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent."  "The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 1 percent." Hard to believe that just six weeks ago the fed funds rate was at 1.50%. Now we are near zero. The use of a range is unusual and perhaps unprecedented. Then again, the fed funds rate has never been this low before, and at the low end of the range I can safely say that it is a record that will never be ...

Currencies continue to rally…  More Stimulus…  Data shows more rot on the vine… And Now… Today’s Pfennig!

Another rally day in the currencies yesterday… One that wasn’t as pronounced as Monday’s 3-cent rally… But a rally just the same, and at one point, the euro was trading above 1.30… Hadn’t seen that level in a while, so welcome back to the 1.30 level, Mr. euro…

Someone sent me a note the other day, and said, why don’t you talk about Australia, Canada, and Swiss more? Hmmmm… Maybe they don’t read the Pfennig “every day”… But those currencies are in my notes most days, and if they are not, they are a part of the overall direction in currencies that are being pushed down by the Trading Theme… But in the spirit of the season…

Aussie dollars have rebounded nicely the last three days, but this is really putting a band-aid on a bullet

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The U.S. Federal Reserve and Treasury Department announced yesterday (Tuesday) $800 billion worth of stimulus measures to rev up three primary engines of the U.S. economy – homebuyers, consumers and small businesses.

This newest economic infusion follows a $700 billion banking system bailout package that was unveiled in late October. At least half the cash has been injected directly into U.S. banks and insurance companies, firing off a flurry of takeover deals – with more expected to come. And it precedes an anticipated package being designed by the new economic team that’s been assembled by President-elect Barack Obama. That package is still in its formative stages, but estimates of its ultimate size range from $500 million to $1.2 billion.

The $800 billion package unveiled by the Fed and Treasury Department yesterday consisted of several parts.

In one statement, the Fed announced it would purchase as much as $500

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