Today the news is unrelentingly bad. Layoffs are soaring, home building is plunging, and stocks are falling off a cliff. The whole house of cards seems to be collapsing. Here are the headlines for my top four news feeds at 1:00 PM Pacific Time on Wednesday the 19th:

S&P Sinks to Five-Year Low Fed Policy Makers See Economy Shrinking Through Mid-2009 Leveraged-Loan Prices Fall as Funds Are Forced to Sell Deutsche Bank to Cut 900 Jobs in Trading, Derivatives Citigroup to Wind Down Failed SIVs After $2.2 Billion of Losses HUD expands mortgage modification program Fed's Kohn vows vigilance toward rising risk of deflation Lack of solid borrowers causing credit crunch Consumer Price Decline Prompts Fear of Deflation Consumer prices fell in October by 1 percent, the largest drop in the history of the survey, raising the specter of deflation Detroit Chiefs Back on Hill for a Second Day Chemical Maker Cuts Output Amid Downturn Fed sharply lowers forecasts, hints of rate cut Stocks fall as fate of automakers hangs in balance Consumer prices drop record 1 percent in October US home construction sinks to new record low

Imagine how it must feel to be a Treasury official or central banker today. Unlike the rest of us, who can only watch with horrified fascination as the global economy implodes, you’re actually expected to do something about it. But what? Everything you try, no matter how huge and impressive it sounds at first, fails miserably within days, if not hours. Now you’re huddled with your advisors around a conference table, yelling at your foreign counterparts on the speakerphone. You need a new plan to keep the world from ending tomorrow. And though the details are contentious, everyone knows that conventional wisdom permits only more of the same--tax cuts, spending increases, lower interest rates. More heroin for the junkie, yes, but when the alternative is a dead junkie, what can you do?

In the end the G-7 (or G-20 or whatever) will reach agreement. And because all their previous plans have failed, they'll up the ante in the hope that there’s a number out that’s big enough to do the trick.

So look for something, in the next few days if not before the U.S. markets open tomorrow, that’s truly impressive. A good guess would be a serious rate cut in the U.S. and Europe, and a promise of more asset purchases across the fixed income spectrum. Spreads have to come in, so governments will buy corporate bonds. Home lending has to be freed up, so Fannie and Freddie will be ordered to buy any and all mortgages that banks want to sell. Millions of former auto workers and mortgage bankers need jobs, so infrastructure will be rebuilt on a grand scale. All of it paid for with newly printed paper.

And so the bell rings for another round of monetary policy's Ultimate Fighting Championship: Global financial implosion versus the unlimited printing press. Entire history and economics books will be written about this year. But for now, for those of us who aren't making policy but do have capital at stake, the question is simple: When will the markets finally figure out what all this means for fiat currencies and precious metals? 


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