The legislation that created the Federal Reserve System also gave it some lofty (albeit questionable) reasons to exists. The functions and macroeconomic objectives listed below come from a Power Point presentation prepared by the St. Louis Fed (Purposes and Functions of Federal Reserve System — PDF Version) that sums up the purpose and objectives for the Fed.

The Federal Reserve’s Functions

• Conduct the nation’s monetary policy in pursuit of full employment and stable prices
• Supervise and regulate banking institutions, so as to ensure the safety and soundness of the nations banking and financial system and to protect the credit rights of consumers
• Maintain the stability of the financial system and contain systemic risk that may arise in financial markets
• Provide financial services to the U.S. government, public, financial institutions, and foreign official institutions.

Macroeconomic Objectives

• Economic Growth in line with the economy's potential to expand;
• A high level of employment;
• Stable prices;
• Moderate long-term interest rates.

Theoretical Errors

The macroeconomic objectives of the Fed contain numerous theoretical errors. In general they amount to "errors of aggregation" (summing units that will not sum, e.g. adding the prices of pigs to the prices of cell phones).

I will highlight some of those errors here, with a brief elaboration.

Economic Growth in line with the economy's potential to expand

The "economy's potential to expand" is unknown and unknowable

A high level of employment

Shifts in money quantity cannot create "a high level of employment;" it can only distort information that business people use to make employment decisions.

Stable prices

Unstable prices carry valuable information about shifting resource allocation in the economy. "Stabilizing" those prices only distorts that information.

Moderate long-term interest rates

Rising and declining interest rates also provide valuable market information. To maintain any long-term interest rate target—like setting targets for any prices—only distorts that information.