With the economy hitting a “soft patch,” investors are wondering if we may see the so-called QE3, a third round of quantitative easing in which the Federal Reserve would use its money-making powers to buy bonds and other investments.

Keep in mind that it was about a year ago that Fed Chairman Ben Bernanke, launched QE2.  At the time, he was concerned about the economy.

But the main result of the policy was a surge in equities and commodities prices.  In fact, emerging market economies — such as China, India and Brazil — had to boost interest rates to deal with the volatile capital flows.

It’s still unclear if QE2 worked or not, but at least the U.S. economy continues to show some level of growth, albeit sluggish.

So does this mean Bernanke will have a third try?  So far, it seems fairly remote — last week Bernanke gave no hints about launching QE3, and he tends to say what he intends.

Rather, Bernanke thinks that the economic slowdown is temporary.  A big part of it, he said, has been the impact of the major earthquake and tsunami in Japan.  Because of this, there have been major disruptions to the world economy.

There are also concerns about a debt contagion in Europe.  What if Greece defaults on its debt and the problems spread to Spain?  Would this wreak havoc on the global economy?  It’s certainly a big risk factor, but then again, the European Union has been dealing with this for some time.

Thus, if QE3 does happen, the response is likely to be highly negative.  Essentially, it would be an admission that things are quite bad.

Instead, Bernanke will use other less extreme mechanisms, such as rock-bottom interest rates. This should help provide some type of floor for equities prices, especially those that have strong cash flows and dividends like Johnson & Johnson (NYSE:JNJ), Chevron (NYSE:CVX) and Kraft (NYSE:KFT).

But the volatility can still be rough.  Over the next few months, there will be headline-risk for matters like the fight to raise the debt limit as well as news on unemployment and real estate prices.

In other words, for the near term, it is probably a good idea to take a cautious approach to the markets.

Tom Taulli’s latest book is “All About Short Selling” and he has an upcoming book called “All About Commodities.”  You can find him at Twitter account @ttaulli.  He does not own a position in any of the stocks named here.