It defies both common sense and monetary theory – or at least until you find out where all that QE3 money ended up.
Here's a chart that illustrates the growth in the U.S. money supply, mostly as a result of QE1 through QE3:
Now here's a chart of the amount of excess reserves sitting in private banks. See any similarities?
Note that until the 2008 financial crisis, those bank reserves were close to zero. Now they have swelled to nearly $1.9 trillion, almost all of which is the money produced by QE1 through QE3 and beyond.
In other words, more than 80% of the hundreds of billions of dollars that the Fed created supposedly to stimulate the U.S. economy never made it to the U.S. economy.
This is why some critics have derided QE3 as "pushing on a string."