Royal Bank Report – Investor chasing liquidity spiral down the m3-m1 liquidity funnel -- small investor rationale to sell shares at below true value, chasing liquidity
Modern Federal Reserve theory -- recognizes m3-m1 liquidity funnel sets a constraint on cash liquidity, creates a spiral chasing liquidity, causing stock values to plummet below true value. Therefore, in a world financial crisis like this, the Fed must step in and buy, and buy and buy, so small investors have the liquidity to ride out the storm.
The plan. The federal reserve lends the Canadian Banks 5 to 10 billion each (bank-of-clearance loan-credits. Immediately, to buy stock that are bluechip and selling at below real value p/e ratios. This in itself will provide a nice return for the banks to rally again. The Canadian federal election should be debating the buying up of bargain.
Selling below the average, accpting less then real value. Standard example, is insurance -- the rationale person accepts a lower value, then the average outcome value, to avoid the worse outcome. The avoidance outcome rule and the m3-m1 money supply funnel, limiting available short term liquidity (the lack of chairs to seat everyone that wants to sit)-- creates a spiral of selling stocks at below true value. Therefore, it is the responsibility of each nation's Federal Reserve to rise to the occasion, and provide the needed liquidity, to reduce the effect of the cash liquidity spiral. The spiral in canadian markets plays a bigger role. Canada more prone to liquidity shocks, greater swings.
Macro money supply events. [Examples: federal reserve having more assets than total fiat paper currency outstanding, cannot be expressed in fiat currency / and the bank multiplier effect, and a massive redeposit transfer to another bank, can not be expressed in fait currency, expressed in bank of clearance credits. / A flood of small investors and large pension funds, and RSSP's cash-outs, all demanding available liquidity, can not express in actual bills. The spiral sells out that nation's economy cheap.
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share to buy calls on -- tsx symbol x and nova symbol ncx -- prime examples of stocks below true value.
Sunday, October 12, 2008
Friday, October 10, 2008
Once in a life-time Stock Market Crash -- small investors scramble to convert into cash,
Yesterday the DOW went below 10000. Today the Dow crashed further, below 8000 then rose then fell
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The massive selling, aka demand for cash in the stock market, says clearly that the world economy has to theorize about the types of money supply, and how changes in allocations in this monetary unicerse, affects economics and the stock market.
The amount of world fiat currency and liquidity, is far smaller than then the ability to numberize, make liquid, the amount of assets(stocks etc.) The bank mulitplier effect and the market capitalization effect -- have created huge reserves that went into stocks etc, now as cash is demanded for this inventory, not enough currency to go around -- like a funnel,m3 money suply tring to convert into the m1 money supply.
Making common sense the Cash spectrum m1,m2,m3,m4 funnel, is key to saving world economy -- the Federal Reserves around the World must step to the plate and buy.
Monetary economic theory -- as the bank business mulitplier effect, allows business potentials to be realized, this creates a market of trade. that has a size greater than the actual cash out there, creating a stock market crisis if liquid assets like stocks, demand cash. Liquidity tokens far exceed real paper cash. Add with the baby boomers retiring and desperate to save their retirements, the demand for liquid will further destroy stock marketvalues.
[Fundimental monetary theory is that people's total cash holdings, as they believe to be real, is expontenialy larger than the actual cash out there. This is what is happening in the market right now. M3 liquidity is trying to turn into m2 liquidity. Not enough to go around.
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It is an economic emergency for Canada to follow the correct measures. First, make sure the Canadian dollar is not manipulated down in crash. Canadian dollar crashes to what in this crash? The run should be to Canadian dollars, not from it. [Currency values are relative to other currenicies, meaning not all curriencies at once can decline -- any decrease, there is a corisponding increase of another currency.] World investors are looking what to do, and set their demand for Canadian dollars from what is happening in the World Financial Crisis, not only fundimentals. Therefore the Bank of Canada must defend against those selling Canadian dollars to manipulate. Example, these canadian dollars be sold to down Canadian dollar are levaraged by Canadian banks. The banks must not sponser this sort sellinf of the Canadian dollar. Basically if one does not have Canadian dollars, then they should not have the ability to short our dollar, to destabilaize at certain times, like yesterday when canadian dollar fell two cents compared to to the standard.
Second, Canadian stock p/e ratio's are extremely good right now with crash. Ex. tsx, symbol x 26, nova symbol ncx at 18, are awesome deals. [Buy long term calls and make a fortune.] Canada has a major problem in monetary economics, as Canada has so much potenial, and needs liquidity for this, but Canada lacks a modern liquidity Bank of Canada system, therefore there is a cash shortage. [A correct monetary system produces the capital domestically, and is less reliatate on foreign capital.] In the current stock market crisis, the lack of cash to cover the potentials, creates major problem in coverting liquid assets to cash. Not enough Canadian curreny to go around. Not fair on small investors that Bank of Canada is negligent on developing a modern monetary system.
Only so many tokens, so only so many can cash out.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The massive selling, aka demand for cash in the stock market, says clearly that the world economy has to theorize about the types of money supply, and how changes in allocations in this monetary unicerse, affects economics and the stock market.
The amount of world fiat currency and liquidity, is far smaller than then the ability to numberize, make liquid, the amount of assets(stocks etc.) The bank mulitplier effect and the market capitalization effect -- have created huge reserves that went into stocks etc, now as cash is demanded for this inventory, not enough currency to go around -- like a funnel,m3 money suply tring to convert into the m1 money supply.
Making common sense the Cash spectrum m1,m2,m3,m4 funnel, is key to saving world economy -- the Federal Reserves around the World must step to the plate and buy.
Monetary economic theory -- as the bank business mulitplier effect, allows business potentials to be realized, this creates a market of trade. that has a size greater than the actual cash out there, creating a stock market crisis if liquid assets like stocks, demand cash. Liquidity tokens far exceed real paper cash. Add with the baby boomers retiring and desperate to save their retirements, the demand for liquid will further destroy stock marketvalues.
[Fundimental monetary theory is that people's total cash holdings, as they believe to be real, is expontenialy larger than the actual cash out there. This is what is happening in the market right now. M3 liquidity is trying to turn into m2 liquidity. Not enough to go around.
~~~~
It is an economic emergency for Canada to follow the correct measures. First, make sure the Canadian dollar is not manipulated down in crash. Canadian dollar crashes to what in this crash? The run should be to Canadian dollars, not from it. [Currency values are relative to other currenicies, meaning not all curriencies at once can decline -- any decrease, there is a corisponding increase of another currency.] World investors are looking what to do, and set their demand for Canadian dollars from what is happening in the World Financial Crisis, not only fundimentals. Therefore the Bank of Canada must defend against those selling Canadian dollars to manipulate. Example, these canadian dollars be sold to down Canadian dollar are levaraged by Canadian banks. The banks must not sponser this sort sellinf of the Canadian dollar. Basically if one does not have Canadian dollars, then they should not have the ability to short our dollar, to destabilaize at certain times, like yesterday when canadian dollar fell two cents compared to to the standard.
Second, Canadian stock p/e ratio's are extremely good right now with crash. Ex. tsx, symbol x 26, nova symbol ncx at 18, are awesome deals. [Buy long term calls and make a fortune.] Canada has a major problem in monetary economics, as Canada has so much potenial, and needs liquidity for this, but Canada lacks a modern liquidity Bank of Canada system, therefore there is a cash shortage. [A correct monetary system produces the capital domestically, and is less reliatate on foreign capital.] In the current stock market crisis, the lack of cash to cover the potentials, creates major problem in coverting liquid assets to cash. Not enough Canadian curreny to go around. Not fair on small investors that Bank of Canada is negligent on developing a modern monetary system.
Only so many tokens, so only so many can cash out.
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