The money-changers in Wall Street’s temple apparently think it slightly less likely today than they did yesterday that the Fed will call for a 50 basis point cut in the federal funds rate target when they wrap up their meeting this afternoon (trading in futures contracts on the Chicago Board of Trade show about a 75% likelihood of a half-point cut, compared to the 86% just a day earlier) but a cut of at least 25 basis points is still generally taken as a given.

This is on top of the surprise 75 basis point cut the Fed announced Jan. 22, the first inter-meeting action since September 2001 (you might remember a bit of commotion right around then) and the largest single cut since October 1984.

And that was on top of the 25 basis point cut they announced Dec. 11. And the 25 basis point cut they announced Oct. 31. And the 50 basis point cut they announced Sept. 18.

So what all this means is, depending on whose forecast you believe, the funds rate will stand by the end of the day at either 3.25% or 3.0%. That’s in comparison to the European Central Bank’s key rate of 4.0%, and despite the fact that the dollar already stood at historic lows against the euro even before the rate-cutting binge.

It also means the benchmark rate could stand a full point below the 4.1% rate of consumer inflation reported in 2007, the highest rate in 17 years.

So when the cuts come, and when you’ll undoubtedly see a rally on Wall Street, and when Jim Cramer and his ilk complain that they didn’t come fast enough or didn’t come deep enough, just keep one thing in mind, folks:

We’ve watched this movie before. And it sucked.

It was called the 1970s, the era of “stagflation.” Yes, it was a groovy time for sea monkeys, puka shells, Hostess fruit pies, X-ray specs, and other goods hawked in the back pages of every issue of Howard the Duck. But economically? Yeah, the Seventies totally blew, dude.

It especially sucked if you happened to be a Keynesian economist, and had to rethink your entire economic model when you saw rampant unemployment (that’s the “stag” part, as in stagnation) alongside rapidly rising prices (there’s your “flation,”) something the General Theory told us wasn’t supposed to be possible. For a whole decade, our nation’s leaders were hamstrung trying to fix the problem. Nixon rammed through price controls and took us off the gold standard. Ford distributed some nifty buttons. Jimmy Carter opted for the “group hug” approach to solving our economic woes.

None of it much worked until Paul Volcker came in and jacked the shit out of interest rates, dragging us through a fairly prolonged recession that didn’t much ease until the friendly visage of Michael J. Fox started appearing on Americans’ television screens and convincing them it was ok to be consumers again.

Whether “Stagflation Part Deuex: Stag Harder” will have as pleasant a resolution is anyone’s guess, at this point. But in the meantime, as the Fed continues to turn our dollars into monopoly money, it might not be a bad idea to invest in a wheelbarrow.

Filed under: The Dismal Science, Pop! Goes the Culture