Warren Buffett compares US Fed to a hedge fund

First, the Fed's actions are a mix of fiscal and monetary stimulus. They are not different to Keynes' idea of fiscal stimulus, since they inject money into the economy in cases where even zero interest rates couldn't.

Second, in order for stimulus to work, it must convince people to make long term decisions (such as building physical factories, starting companies, buying durable goods, etc.) and therefore the Fed must commit to a long term stimulus plan. Buffet clearly outlines the Fed's approach to making this commitment.

I know a lot of people on HN are deeply suspicious of mainstream macroeconomics, and that is understandable since even with my training I can't really verify that people in the field are doing things right. However, I will say that there are a large number of countries in the world that are big enough to have their independent macroeconomic policy. So far, no country I'm aware of has chosen not to use the above two principles, which together can be taken as a summary of neo-Keynsian economics. If there really some better way out there I think that some country would have tried it.

I'm not a macro expert, but my understanding is that a country need not be completely autonomous in order to have its own macro policy. Goods cannot flow perfectly between countries, and so macro policy will always have some effect.

The more a country imports and exports, and the smaller the country, the less impact its macro policy will have.

So the reserve bank of China can influence Chinese interest rates and hence have an impact on the Chinese economy. On the other hand the reserve bank of a "small open economy" cannot do much to change interest rates.

Obviously you haven't read Keynes, or you have at least referenced his warning:

^^^ Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. ^^^

(I add: the one man in a million including, apparently, people with PHDs)

You can go to the FED site and look at all the bonds they purchased from the financial institutions. Outside of the Maiden Lane's, most of the bonds have increased in value. This was a profitable trade for the FED; liquid cash for bonds well below par.