Third Week for ECB’s QE: 6.7 billion Euros

Last week accounted for the third week where the European Central Bank’s (ECB) Quantitative Easing (QE) has been in action.

This from Reuters, (bold emphasis mine)

The ECB said on Monday it had more than halved its bond purchases to 6.7 billion euros last week. The central bank had bought a record 22 billion euros in the week to Aug. 12, when it intervened in the bond market after 19 weeks of inactivity.

Continued support from the central bank remains crucial to prop up investors' confidence in the short-term, analysts and traders said, amid uncertainties over a second bailout package for Greece.

Adding to markets' jitters, Italy is struggling to agree changes to a 45.5 billion euro austerity package the government hastily approved this month in return for the ECB's help and which is making its way through parliament.

"Italy needs to convince the market it can make it without help from the ECB," Cazzulani said.

This follows the previous two weeks of €22 billion and €14.3 billion of bond buying where ECB’s debt monetization facility has now reached €120.3 billion, according to Zero Hedge.

The above news account only exhibits that global financial markets have been artificially propped up by actions of major global central banks, in the hope that markets will be assuaged by the political tokenism applied by crisis affected governments in reforming their system.

The fact is that there hardly has been any meaningful free market reforms or reforms aimed to improve on the real economy. Resources are, in this process, merely being rechanneled or transferred from the welfare state to the banking system.

The underlying goal has been to preserve the banking system, which has over the years bankrolled the welfare state, through government bonds. And the welfare state-banking system relationship has been backed, regulated and implicitly guaranteed by the central banks.

Professor Gary North aptly writes,

Governments always announce and defend by monopolistic violence their legal sovereignty over money. They say that they will control the terms of exchange. All monetary standards are based on government promises and IOUs called government bonds. These contracts are always broken by governments.

Contracts are being broken consistently as governments’ inflate in order to uphold the current welfare based political system.

A system that depends on inflation is never sustainable.