Libertarian the Answer

"... The Federal Open Market Committee is an unwieldy and archaic body in the best of times; it includes seven Fed governors in Washington (at the moment there are only five) and the presidents of the Fed’s 12 regional banks, which are dispersed in cities like Richmond and Cleveland, in the country’s industrial centers circa 1913, when the Fed was founded.

This hydralike form is a result of the country’s abiding fear of concentrated financial power. Congress twice set up central banks in the early years of the republic but let their charters lapse. Throughout the 19th century the country frequently experienced banking panics. After the Civil War, the United States adopted a gold standard, but without a central bank, the amount of money in circulation was fixed according to the available supply of gold �?a rigid structure that the economy was outgrowing. The demand for credit was variable. For instance, it was heavy in the fall when the crops came to market.

In 1907, the U.S. suffered a brutal recession in which thousands of banks failed. The panic subsided only when J. P. Morgan Sr., then 70 and semiretired, personally rescued the stock exchange. Financiers realized that America needed a public lender of last resort: a central bank.

Paul Warburg, the scion of a German-Jewish banking family, was frustrated by the primitive financial system of the United States, his adopted home, and he formed a tentative alliance with Nelson W. Aldrich, the powerful chairman of the Senate Finance Committee. In 1910, Aldrich, Warburg and a group of other bankers met in secret on Jekyll Island, off the coast of Georgia, to write a plan for a central bank. Reporters were told they were going duck hunting.

The public was highly suspicious of financiers, especially East Coast financiers, and the Federal Reserve was consciously designed to allay their fears. The regional Fed banks were to be semiautonomous, and they were chartered with their own boards, whose members were drawn from the local communities and a majority of whom could not be bankers. Political authority was vested in Washington; the Fed’s capital, however, was contributed by private banks all over the country. ..."

I understand the suspicions regarding "ownership" of the Fed - those paragraphs are as good a brief summary as I've seen.

I hope the rest of you enjoy reading as much as I did.

Ben Bernanke has a considerable challenge ahead - in my opinion, there could be no one better suited to the position he holds. We'll see how it all works out.