Small invester rationale for selling a dollar for fifty cents

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.