By John Wasik
The opinions expressed are the author’s own.

The Federal Reserve can buy all the US Treasury bonds it wants, but it won’t do much other than make corporate treasurers waggily over being able to borrow at incredibly low rates.

As a last-ditch effort to stimulate the US economy, the Fed’s $600 billion initial purchase of US debt, also known as “QE2,” could be better spent directly helping Americans and easing the housing crisis.

Part of the problem is not that interest rates aren’t low enough — short-term rates are practically zero — it’s that there’s little demand because nobody is getting financially ahead through employment, homeownership or 401(k)s. There’s no sense in the middle class of a “wealth effect.” Fear is ruling now. So here are some proven approaches that might help:

A Payroll Tax Holiday. The Fed could boost employment by redirecting its QE2 purchases to offset a payroll tax holiday. This would directly put money in both employers’ and employees’ pockets. It might even stimulate some hiring.

A Really Potent Housing Credit. What would happen if the Fed intervened in the housing market in a meaningful way instead of buying distressed mortgage securities and Treasury debt? It could redirect money (with Congressional blessing and IRS oversight) into paying for homebuyer tax credits.