That's true. Primarily because the busts - or "panics" - lasted far longer than they do today. There are multiple decade+ strongly deflationary periods in the 19th century. That is not a Good Thing. That is not an accurate description of what has been going on in the US. The Fed is not nearly as independent as people would like to think, and is essentially powerless to stop the bubble cycle when Congress after Congress and White House after White House is busy spending money into existence. Yes, in theory, the Fed could slam interest rates sky high and refuse to move them until the federal government restores fiscal sanity, but let's be blunt, a hypocrite like Ron Paul would be the first in line demanding the Fed's head, if not outright abolishment, if they actually tried doing that. The Fed is limited to reacting to what the People's duly elected representatives decide to do.
Ok... I don't want to get into too many history lessons. Every scenario is essentially unique. How do you feel about Spitzer labeling the Fed as a ponzi scheme. Do you think sole control over the money supply is not too much power?
The Federal Reserve nor any of the Banks have ever cared or any other government agency. They could care less how their actions reflex on anyone. Their salaries and bonus packages are just a little example. It is pure and simple about money. They will never get an audit of the Reserve's actions at best it will be the same lawyers and accountants that provide the accounting for the other trouble Banks providing an altered report to accommodate the Public as Wall St. is an arms lenght partner.
The FED may not be ideal, but let's face it, we're not going back on the gold standard. That would curtail way too much congressional power and spending. So the FED is by far the lesser of two evils. I certainly would rather the fed control the money supply than congress. In fact, just the thought of Reid, Pelosi and Frank setting monetary policy, makes me want to vomit