No question, the Fed plays the role of the even-handed financial House of Windsor, sort of a royal family and Queen Elizabeth II to our economy. Its board of governors still cheerleads, pretends to bring order to chaos and even dishes out punishment to a select few usual suspects. In August, for example, the Fed announced they'd had an "enforcement action" with Valley Financial ( VYFC), MetLife ( MET), Gold Canyon Bank and many others. But it does not take a Ph.D. from the London of School of Economics to see this Fed has never been less influential. Why? These days the U.S. economy it presides over is just another mall in the global economy. The 314 million or so people the U.S. Census Bureau counts as Americans make up just 4.5% of the 7 billion or so souls in the world. And it's not like we 314 million are knocking the lights out financially. The Boston Consulting Group, in a report that's simply a must-read for money managers called the Global Wealth 2012, said so-called "old-world wealth" -- that's the U.S., Europe and Japan -- saw its private financial power decline by about 1% last year. "New-world wealth" -- that's Asia, the Near East and South America -- grew by a stunning 10%. "The global wealth management Industry is at a crossroad of sorts," summed up the report. That's being polite.
That is only part of a deeper digital dysfunction at the Fed. Those of us who study financial information for a living are beginning to wonder what these Fed people do all day long with the $4.4 billion it spent in 2011. Sure, the Fed buys and sells bonds, messes around with overnight lending rates and fills whatever rooms with smoke that it must. But this organization is simply not fulfilling its core mission of providing first-rate financial information. Most of the data I find it produces, say on FederalReserve.gov, are available from banks themselves. And even other government data providers are making the Fed look dangerously out of step. Go ahead. Give the U.S. Bureau of Economic Analysis a try. It's interactive tables are terrific. And blissfully, there is none of none of the Fed's ponderous policy-speak. The wizard of monetary Oz
But here is the seriously ugly big-think: What would really happen -- I mean really happen -- if the Fed raised rates 100 or even 200 basis points? Yes, there would screaming and yelling. But would it really keep banks from lending that much less than their current feeble lending rates? I doubt it. Or if the Fed somehow shaved 20 basis points off the prime lending rate, would it really prod, say, Apple ( AAPL) or IBM ( IBM) or any other Fortune 1,000 company to invest the hundreds of billions in cash that sit idle in large company bank accounts? Absolutely not. Or would active bond buying drive inflation down to a point where venture capital firms finally stop from cynically betting on start-ups as mere buyout targets and begin to make real companies that create real jobs? Only in your dreams. Just like Mick Jagger or Bruce Springsteen, who are the last of a dying breed, we will never again live in an age of rock star Fed chairmen. Bernanke will never be Paul Volcker or Alan Greenspan, because nobody can. Bernanke does a decent job of pulling the levers and firing up the smoke effects that he still can work. But pretending that this man -- or the Fed, for that matter -- guides our economic destiny is like strapping on ruby slippers and wishing there was no place like home. And, considering the real work the needs to get done, investors have little time for this game of pretend. Face it, Bernanke is nothing more than the Wizard of Monetary Oz.