The Federal Reserve can use the tools it has to modify short term interest rates. With QE, they can try and change the yield curve to lower long-term interest rates. This can have some effects like lowering the interest costs for businesses. Fundamentally, the federal reserve cannot make an investment a better investment. Investors acting as honest actors will not invest in something where they do not expect a return.
2) The banking system is what literally prints money. The nearly 60 trillion in credit is created by the private member banks, not the central bank. Government's own share of its debt has shrunk over the past 5-6 years IIRC. Besides, the US government doesn't need the Federal Reserve to buy up its debt...it is an incredibly desirable asset, as evidenced by constant demand for it.
3) The Federal Reserve is audited: http://www.federalreserve.gov/faqs/about_12784.htm
Plan for eliminating the national debt in 10-20 years:
Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a
Want DP delivered to your inbox daily? Subscribe here: