Many investors are headed into their last full trading week of the year.   Everybody is sticking around to see what, if anything happens, when the Federal Open Market Committee cuts their benchmark fed fund rate to its lowest level since 1958 tomorrow afternoon.  It is a virtual "given" that the members of the committee will vote unanimously to cut the fed fund rate (the interest rate banks charge each other for overnight loans) to .50 percent from its current level of 1.0% level.  Of even greater interest to the global investment community is what hints, if any the central bank might drop in tomorrow's post-meeting statement about its remaining policy options.

I see reasons to believe another Fed rate cut will likely amount to nothing more than an attempt to drain the ocean with a teaspoon.  We've reached a juncture in the credit markets where it really doesn't matter how low interest rates go -- banks are refusing to lend and consumers either have no desire to borrow - or they are in such troubled financial straits they can't meet the qualification criteria for a loan. 

So what's the Fed to do?  Many believe the Fed will announce in their post-meeting statement tomorrow afternoon (2:15 p.m. ET) that the answer to rekindling economy growth is actually quite simple - print money like crazy. 

In a nutshell the idea here is that by flooding the economy with money - banks will ultimately find themselves bursting at the seams with capital - and they will essentially have no other option than to start lending.  As the short-term credit market swings back into action, business confidence will rise, employment will improve and the engines of commerce will roar back to life.

On its face it all sounds like a perfect "storybook-ending" to a very difficult period in American financial history.  Unfortunately, there is a pretty big "fly-in-the-ointment" here.  The potential for very high inflation down the road if the Fed is successful with this "quantitative easing" strategy is exceptionally high - but from the Fed's perspective -- that's a story for a different day. 

I'm not so sure mortgage investors will be so lackadaisical with their forward-looking inflation concerns. Should the Fed announce big new plans to ramp up their "quantitative easing" -- look for mortgage interest rates to find it increasingly difficult to move notably lower from current record low levels.   

Today's conforming 30 year fixed rate is at 5.125%.