US Federal Reserve is the holder of the world's financial firepower
The world has come to know who really controls financial markets after Ben Bernanke's confidence-killing statement on US bond buying last week
Last week saw banquets, speeches and interviews to mark the retirement of Mervyn King, the governor of the Bank of England, and a sharp reminder of where the real financial firepower in the world lies - with the chairman of the US Federal Reserve Board.
Ben Bernanke, the current Fed chairman, proved the point when he claimed that "later this year" would be a good time to ease off on the unprecedented US$85 billion per month financial easing that the Fed has been engaged in through the purchase of bonds.
No, global markets did not like the idea at all. One commentator declared: "Bernanke kills Fed credibility and the confidence fairy in one shot." Markets promptly went into a tailspin with the Dow Jones stock index and gold dipping and the yield on 10-year US Treasury bonds jumping to 2.44 per cent from 2.18 per cent in less than a day.
The perverse exception was Japan, where the Nikkei-225 Index recovered above 13,000, partly because the yen headed back down again towards 100 to the US dollar. The yo-yoing yen is a separate and potentially dangerous story that should be a cautionary tale for politicians that dissuades them from trusting markets to do what should be their own heavy lifting.
One of Bernanke's predecessors, William McChesney Martin, famously declared that the job of a wise central bank chief was to take away the punch bowl just before the party got into full swing? The failure of Alan Greenspan and even Bernanke himself to remove the punch bowl of the huge financial party going on before 2008 was one reason for the mess that the world economy is now in.
This time round, the situation is complicated because, though stock markets have been partying, the benefits have not yet fully penetrated into the real economy. The US is on a road to recovery but job creation is not keeping pace. The European Union has clambered from a state of crisis but still has major problems to sort out, especially related to the creation of new jobs.
Right-wing newspapers like Britain's Daily Telegraph claim that Bernanke's promise in effect was taking away the punch bowl even before the party has started. But that belies the dangerous trends that have become obvious with the rich 0.1 per cent in the US and many other places in the world making bigger and bigger fortunes while the poor find it increasingly harder to make ends meet.
With the policy of quantitative easing now going through three rounds since 2008 and with interest rates languishing at virtually zero in most of the industrialised world, there are real questions about whether quantitative easing has served its purpose or is too blunt and bulldozing a weapon to deal effectively with the real economic crisis, particular questions of unemployment.
Bernanke's professional obituaries are already being written on the expectation that he will step down at the end of the year. President Barack Obama effectively declared that Bernanke will go when he told a television interviewer that the Fed chief had "already stayed a lot longer than he wanted or was supposed to".
One of the world's richest financial players and respected economic commentators, Mohammed el-Erian, gave Bernanke a favourable rating in a considered article in Foreign Policy.
El-Erian summed up thus: "Bernanke will be remembered as a bold policy leader who helped avoid a global depression by courageously taking the Fed into unchartered waters using highly experimental - and highly risky - policies."
Leaving aside the glossing over of Bernanke's responsibility for helping to create the financial mess in the first place, El-Erian is surely right that "three years after pivoting from saving the imploding financial markets to explicitly targeting employment and economic growth, the Fed is no closer to winding down its experiments".
Who knows who Bernanke's successor will be and what his policies will be. And that is an important and unacknowledged problem concerning the way the world's biggest economy works.
Even before the race has started, pundits have put forward a string of names of potential successors to Bernanke.
An early favourite is Bernanke's deputy, Janet Yellen, "a small lady with a high IQ". She would be the first woman Fed chairman. At 67 when she would take over, she would probably be a single-term head.
Other front runners include former vice-chairman of the Fed Douglas Ferguson, who would be the first African-American Fed chief, or Christine Romer, formerly chairman of the Council of Economic Advisers.