The FED was championed by bankers and their intellectual supporters as a necessary means to provide for more orderly adjustment of the money supply, allowing for an elastic currency. It was later argued that a wisely managed credit system promotes the production of goods, so neither excess monetary inflation nor deflation is desirable. Such a view quickly morphed into justification for price stabilization policy and then full-orbed macroeconomic and financial stabilization policy. The conventional rhetoric is that the FED is indispensable to protect us from both price inflation and deflation as well as general economic disaster.
In reality, of course, from the beginning the Federal Reserve System was deliberately designed as an engine of inflation, the inflation to be controlled and kept uniform by the central bank. FED inflation led to the boom of the 1920s and the recession of 1929 that was turned into the Great Depression by invention on the part of both Hoover and Roosevelt. The actions of the FED coupled with Roosevelt taking us off the domestic gold standard and the creation of the FDIC in 1933 made possible even more inflation in the years to come.
After World War II the world suffered under the Bretton Woods System. The U.S. dollar backed by gold and all other currencies backed by the dollar. It turned out to be a pretty good set up for the United States temporarily. As Murray Rothbard explains in his What Has Government Done to Our Money?, it was thought that the Fed could inflate with impunity, for it was confident that dollars piling up abroad would stay in foreign hands, to be used as reserves for inflationary pyramiding of currencies by foreign central banks. The United States dollar could enjoy the prestige of being backed by gold while not really being redeemable. Keynesian economists arrogantly thought foreigners were stuck with the resulting inflation, and the U.S. authorities could treat the international fate of the dollar with “benign neglect.” During the 1950s and 1960s, however, West European countries reversed their previous inflationary policies and came increasingly under the influence of free market and hard money. They began to demand gold for dollars until in 1971 Nixon was forced to “close the gold window.” Thanks to FED-generated monetary inflation, the United States was and reamains on pure fiat dollar standard. The last market check on inflation was removed and inflation spiked and the value of the dollar has plunged.
The FED has given us monetary inflation and a whithering away of the dollar's purchasing power. It has bankrolled massive government debt and fostered much financial and economic instability by facilitating malinvestment and the business cycle. Such is the 100 year history of the FED regardless of who was in charge.