I agree with the others. Take it up with the instructor and his manager/employer. Getting the FAA involved will really have no positive recourse for you either. A stunt like that at my flight school would leave you benched for a week, or maybe even terminated if there was repetition to the complaints.

The instructor obviously has an issue with decision making and good judgement. However, more could be done about this internally than anything. Don't just notify the management, have a sitdown with them before you continue your training with anybody else. I would have serious questions about not only his conduct, but the conduct of the rest of the flight school. This could be an isolated case, but if they are allowing this person to instruct how many others do they have there who are exhibiting such poor judgement?

Third, if you have any friends who are skittish about going up make sure that you're the only other one in the aircraft (assuming you have your private certificate) and minimize the things that would make them nervous. Go up early in the morning to limit turbulence, make shallow turns whenever possible, and keep the climbs and descents to around 500fpm where safety dictates that this is possible. If you're still a student, cross countries are great flights to introduce others to GA as well.