A Q&A on QE3

Q: Why did Federal Reserve Chairman Ben Bernanke launch a third round of bond buying known as quantitative easing, or QE3, last week?
A:Because the stock market told him to. How else can he keep the Dow Jones Industrial Average above 13000? Companies are warning of slower earnings growth.
Q: How big is QE3?
A: $40 billion a month—indefinitely. This is on top of the $45 billion a month the Fed is already spending on another program called "Operation Twist" through the rest of this year.
Q: Phew, is that all?  
A:Hardly. Since 2008, the Fed has dumped more than $2.3 trillion into the economy, artificially levitating the values of stocks and real estate against the ravages of an economic reckoning.
Q: What will the Fed buy with this QE3 money?  
A: Mortgage-backed securities. It is betting that the way to fix a deflated housing bubble is to blow another one.


 Read more from WSJ.....

—Al Lewis is a columnist for Dow Jones Newswires in Denver. He blogs at tellittoal.com; his email address is al.lewis@dowjones.com.