@chris:
Much better the Fed does this, than congress tries to legislate spending (with earmarks and such). The Federal Reserve exists because regulating the economy (so it does not spiral out of control up or down) is important to the strength of the dollar in particular.
What the Fed just didn't certainly didn't weaken the dollar, they may have strengthened it. And the dollar is worth 100 cents, as it always has been. It mainly comes down to purchasing power. Huge inflation in the 70's made it so that the 1960's dollar is worth quite a bit more than the 1980's dollar, and that inflation pressure (~2-3%/year, on average) is now kept much better in check (largely due to the Fed's, and especially Greenspan's work), but that also keeps overall economic growth in check-- largely this means that while growth and recession happen, they do not happen so severely as to cause great turmoil.
In other words, while the getting is good, the Fed saves money (and thus, pulls money out of the economy), as the economy enters a recession, the Fed puts money into the market, artificially smoothing the descent. This certainly won't stop a recession, but as long as they do it rationally, it will smooth the recession, and keep 1929 from happening again.
Also, please realize that I'm not an economist, and frankly should not be listened to on the matters of the economy. However, this is my layman's understanding of what the Fed does.