Did the Federal Reserve plan its long awaited “tapering” announcement to coincide with its centennial? I don’t think so, but this coming Monday, December 23rd is the one hundredth anniversary of the creation of the nation’s central bank. And this week was also Federal Reserve Chairman Ben Bernanke’s last press conference. He will preside over one more policy meeting in late January before stepping down on January 31st.

Similar to many changes in Fed policy in recent decades, this one received a big reaction. The beginning of winding down the Fed’s $85 billion-a- month purchases of Treasury and mortgage bonds by $10 billion, a 12% reduction sent stock prices surging to new highs. The Dow continued its rally on Thursday, closing at 16,179.08.

Why was the market’s reaction so positive? Investors cheered Mr. Bernanke’s encouraging assessment of the economy, “…the economy is continuing to make progress..;” but not too much progress, “it also has much farther to travel before conditions can be judged normal.” The Fed made pretty clear that its now five year old policy of keeping short-term interest rates near zero will continue until 2015 or later.

This week on WEALTHTRACK we are looking at how the role of the central bank has changed and expanded over the last century and debate what its proper role is with two well-known financial historians and favorite guests.

James Grant is the editor of Grant’s Interest Rate Observer, a twice monthly, self-described “independent, value oriented and contrary minded journal of the financial markets. Grant’s is considered to be a must read by many top investors. He is a vocal critic of current Fed policy.

Richard Sylla is the Henry Kaufman Professor of the History of Financial Institutions and Markets and Professor of Economics, Entrepreneurship and Innovation at the New York University Stern School of Business and an expert on the history of interest rates.

Have a very Merry Christmas holiday and make the week ahead a profitable and productive one!

Best regards,

Consuelo