$8.4 trillion: The amount of debt owed by U.S. cor

$8.4 trillion: The amount of debt owed by U.S. corporations at the end of September.

When policymakers at the Federal Reserve meet next week, one of their main agenda items will be assessing the effectiveness of their latest bond-buying program, known as “quantitative easing” or QE. A key goal of the program is to stimulate the economy by driving down interest rates, making it cheaper for companies and individuals to borrow. More borrowing, the Fed hopes, will lead to more spending, more investing and, crucially, more hiring.

New data this week suggests low interest rates are indeed leading to more borrowing. But what happens with the money after that is less clear.

According to the Fed’s Flow of Funds report , released Thursday, U.S. nonfinancial corporations had $8.4 trillion in outstanding debts at the end of the third quarter, up $136 billion from the second quarter and nearly half a trillion dollars more than a year earlier. The vast majority of that new borrowing came in the form of corporate bonds.

The third-quarter data capture only the earliest days of the Fed’s latest bond-buying program, known as QE3, which has further driven down already low corporate borrowing rates . Borrowing, in other words, has likely only increased in the fourth quarter.

The trouble for the economy is that increased corporate borrowing doesn’t seem to be translating into increased investment. Companies spent $304 billion on capital expenditures in the third quarter, only a bit better than the $295 billion in the second. Separate data from the Commerce Department shows that after adjusting for inflation, business investment actually fell at a 2.2% annual rate in the third quarter.

Nor is the money going to workers. Private employers have added less than 2 million new jobs over the past year, a decent figure by recent standards, but hardly enough to soak up all the new borrowing. Even before inflation, the wages and salaries paid to all private-sector employees rose at a rate of less than 0.5% in the third quarter — an increase of just $27 billion over a full year.

So where’s the money going? Cash, for one. Companies had a record $1.74 trillion in cash and other liquid assets on their balance sheets at the end of the third quarter, up $44 billion from three months earlier. Companies added another $215 billion in financial assets that don’t qualify as liquid such as overseas investments and holdings of financial subsidiaries.

Another big use of cash: dividends. Companies paid out $482 billion in net dividends in the third quarter, $27 billion more than in the second and the most since mid-2008, before the financial crisis took hold. Dividends have likely surged in the fourth quarter as companies return money to shareholders ahead of the fiscal cliff.

Dividends, of course, go to shareholders, who can then use the money to spend or invest. And lower interest rates may be boosting the economy in other ways, such as by boosting the housing market and allowing homeowners to refinance their mortgages . But so far, the corporate borrowing binge hasn’t translated into a hiring boom.