Steve Chiotakis: We’re gonna get a look at consumer confidence a little later this morning. There hasn’t been a whole lot of that lately, with the economy stuck in neutral. So is that something
the Federal Reserve can change?
Fortune magazine’s Allan Sloan is with us now to talk about the Fed’s influence — or lack of it these days. Morning, Allan.
Allan Sloan: Good morning, Steve.
Chiotakis: What happened to the old days, when so many people watched what the Fed had to say?
Sloan: What happened is people used to think the Fed, back during Alan Greenspan’s days, people thought the Fed was much, much more powerful than it actually is. Now, with him long gone and Bernanke being collegial and all of these problems, the Fed is getting increasingly tuned out by the markets and its power is declining, no question.
Chiotakis: Was it a personality difference between Greenspan and Bernanke?
Sloan: Part of it is personality, because with Greenspan, no one was ever allowed to dissent publicly from what he wanted to do — none of the Fed governors — and Bernanke lets them dissent. But I think it’s more circumstances because the United States is less influential than it was when Greenspan was around, and Bernanke has less control over the U.S. economy than Greenspan had over the U.S. economy. So the hand keeps getting weaker and weaker and weaker, and yet people in this country expect some sort of miracle from the Fed, and they expect Big Daddy to somehow save them. And I’m afraid it ain’t gonna happen.
Chiotakis: I mean, does the Fed change this then? Is there any way to go back?
Sloan: You can’t go back. All you can do is go forward. And what the Fed is, I think, trying to do is to stop confidence from eroding and try to increase asset values and play for time — which in many ways is what Greenspan did. But now it’s much more obvious, and because the Fed has done so many things, it’s shown most of its hands. So it’s weaker than it was, because everybody knows it doesn’t have much in reserve.
Chiotakis: So if the Fed, Allan, is losing its influence, who’s gaining influence?
Sloan: Now that is a wonderful question.
Chiotakis: Which I’m sure you have the answer to, yeah.
Sloan: Sure. The answer is nobody.
Sloan: It’s all just amorphous. You see now, you have all of these announcements coming about coordinated efforts by the central banks. Nobody has the influence. It’s just a mess.
Chiotakis: Well, a mess that we all have to deal with and report on. Allan Sloan from Fortune magazine. Allan, thank you so much.
Sloan: You’re welcome, Steve.