The European Central Bank's Money Tree has created €2.57 trillion since 2015 - €7526 for every man, woman and child in the Eurozone

On 13 December 2018, the Governing Council of the European Central Bank (ECB) decided to end  net purchases under its Asset Purchase Program that started in March 2015. Their website provides useful graphics that show how this system has worked.

First, here's a graph showing how the Bank's net purchases have increased over that period to reach a final total of €2,569,817,000,000.

The precise details of how much money creation was allowed per month can be seen in this graph.

As you can see, the ECB was buying up assets at around €60 billion every month during the period, though the numbers peaked at around €85 billion in 2016 before tapering off at the end of 2018.

The ECB effectively created €2.57 trillion out of thin air, and used it to support the financial markets by buying up assets (private sector securities and public sector securities). This almost certainly made a lot of rich people a lot richer, and thus will have increased levels of inequality between a priveledged elite and the rest of the population.

The claim was that this was necessary to keep inflation at the optimal 2% level, imposed by the European Union. If you look at the figures for the Eurozone Inflation rate since 2009 (data courtesy of the Trading Economics Website), I suppose that they could argue hat they succeeded. Inflation did indeed increase from around 0% in 2014-2015 to over 2% from June to October 2018. Mind you, it has slipped back to 1.6% more recently.

However, was pumping €2.57 trillion into the financial markets the best way of achieving the aim of achieving 2% inflation? What would have been the problem if the money had been directly injected into the pockets of Eurozone Citizens? According to the latest figures, there are 341,464,266 people living in the Eurozone.  A simple calculation shows that the ECB's money tree could have provided cash payments of €7526 for every man, woman and child in the Eurozone. That's over €30,000 for a family of four.

Would putting money into the pockets of citizens  have been such a terrible idea? Would it have caused runaway inflation?

I doubt it. The vast majority of households in the Eurozone are massively in debt.  It depends on the country, but average levels of debt as a percentage of net disposable income vary between 48% in Latvia, to over 100% in Spain, France, Portugal and Finland. But the record is in the Netherlands, where debt levels average 242% of disposable income.

If a €30000 handout per family had just allowed people to get at least partially out of debt, surely the effect on the economy would have been far more useful than boosting prices of shares? Writing off debt does not cause inflation. But it does mean that Banks can no longer charge so much in interest payments.

In many countries in Europe, citizens are sick and tired of living in a system that is clearly rigged to favour the rich and the superrich. France's "Gilet Jaune" movement is the perfect example. And the risk is that, if we keep on with the current system where important players like the ECB are run by ex-Goldman Sachs bankers like Mario Draghi, there will be a lot of people voting for extreme groups in the forthcoming European Elections. Is it too late to change course? I hope not.

Now that the European Central Bank has revealed the well hidden fact that Central Banks are perfectly capable of creating essentially unlimited amounts of money out of thin air, isn't it time for Citizens to say that enough is enough?  We want that money creation power to be used for something that is actually useful for all citizens - and not just for the 1%.