Regarding the fed's role in malinvestment, the fed obviously has a role in money creation. As I understand it, money has 2 essential qualities: 1) store of value, 2) medium of exchange.
As a store of value, it should reflect the wealth of a nation, somehow characterized. Whether through buying treasuries or other assets, the fed creates money, the amount of which should somehow reflect the value of that which is being purchased. The treasury value paid for is, as far as I can tell, the value of actual future labor and effort by the citizenry. The asset value paid for is reflective of the underlying asset.
The problem is when the fed buys something and then essentially "re-values" it, which I understand is what they did with bad debt. They buy something with a value of 1 for a price 2, and then arbitrarily adjust the value to a level of 2, to match the price they paid.
Such re-valuation is not achieved via market forces, it is merely fiat, hence the tinfoil hat-wearers' term "fiat currency". IMO it is arbitrary, and cannot in the long-run withstand the effect that market forces will have on it. The market force is incremental, and every time an increment is added, another intervention must be executed to counter that market force.
Whether the battle between market forces and fiat is a lopsided one remains to be seen. What we have been seeing is a force-and-response mechanism, termed by some as "kicking the can down the road". Both market forces, and fiat decisions, have piled up hugely in the past 10 years.
As far as the fed's role in creating money for use as a medium of exchange, this is the liquidity we so often hear about, right? How many times has the government taken on private debt, or bought things from the private sector, to take things off private sector balance sheets, in the name of "freeing up capital"? All the time. Is that a good thing? Sure, if you are a bank and you live and die by deploying capital. IMO it is a form of government-sponsored leverage.
Is it an economically good thing, though? Obviously a certain amount of freely-deployable capital is required, but how much? That's the big topic of discussion, with those who benefit from more, arguing for more, and their lobbies are strong inside the beltway. There is a huge conflict of interest at work here, though, which arose from bank deregulation, and the lobby now has the policy-makers over a barrel, essentially.