'Central Banks Have Reached Their Endgame:' Graham Summers of Phoenix Capital Research

"The markets have called Bernanke's bluff," says Graham Summers, chief market strategist at Phoenix Capital Research. The problem, according to Summers, is that Bernanke and company don't have any cards left. As it is harder now than ever to argue for the effectiveness of quantitative easing, the Federal Reserve appears to be running out of policy options to fix the US economy or even temporarily placate markets. Summers:

"From a philosophical standpoint, what we're reaching is the endgame for central bank intervention. When you have a debt problem, you can't fix it with more debt, which is what the central banks tried to do. It works temporarily because it restores investor confidence, but it doesn't address the fundamental issues in financial markets. It becomes a giant Ponzi scheme where we need more and more money from central banks to keep [economies] going."

Now the markets are clearly looking over the same rain-slick precipice they faced back in 2008.

"The Fed has been the primary support for the markets over the last two years. When you take away that important prop, and combine that with an ongoing debt contagion in Europe as well as the US's own debt concerns, you have a recipe for the perfect storm - and that's what we're getting."

We touched on the burgeoning power of central banks in a previous interview with Bloomberg's Linda Yueh. The question now is whether the Fed can wash its hands of QE (perhaps with a new chairman) - and if it can effectively sell some other policy tool in order to continue its far-reaching mandate. If not, this "crisis" will likely result in a significant loss of power for the bank.