(FORTUNE Magazine) – The Fed's 11 interest rate cuts may have helped prop up the stock market, but as any conservative investor knows, they're wreaking havoc on money market funds. Yields are the lowest they've been in 30 years, with the average taxable fund now paying just 1.41% after fees. Indeed, a full 14% of the 569 taxable funds tracked by iMoneyNet yield less than 1%--with the booby prize going to the Lord Abbett U.S. Government Securities money market, which delivers a whopping 0.17%. The numbers would look even worse were it not for the fact that funds on the bottom of the yield pile are now waiving expenses to avoid presenting investors with a negative return. And, presumably, losing them all together.

Sounds at least bearable--until you consider inflation. Because, while it's certainly tame, that economic bugaboo is still hanging around, expected to nudge prices up by 1.7% next year, according to Mark Zandi at Economy.com. That means that unless you're in one of the higher-yielding funds like Vanguard Federal money market (2.18%) or Dreyfus Basic (2.41%), you may actually be paying to park your cash in one of these vehicles. (Hey, it's still a better deal than your mattress, but...) So far, this money-losing proposition has yet to rattle investors, who have some $2.03 trillion stashed in the funds, up 26% since the beginning of 2001. The question to ask: Is the fear of losing money in the stock market greater than the certainty of losing it in money markets?

--Julia Boorstin