Americans Sit On A Mountain Of Cash Amid Pandemic

Published Friday, November 27, 2020 at: 7:55 PM EST

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With the cloud from the Covid pandemic looming large, Americans are sitting on an unprecedented mountain of cash.

M2 -- the money supply -- a statistic no one has cared about since Paul Volcker ran the Federal Reserve in the late 1970s, has exploded!

With bond yields ultra-low and the annual rate of inflation falling yet again in October to just 1.2%, the financial and economic outlook is bright.

It's confounding! In 2020, the nation endured perhaps the worst trauma and drama of the post-War era. Deaths from Covid are breaking tragic records. A political schism is occurring amid an information revolution. The stock market closed at a new record high today.

Money as supply, also known as M2, consists of currency held by the public plus checking, savings and money market accounts. It's skyrocketed! The Covid crisis relief legislation has created an unprecedented cash hoard.

With interest rates low and the Fed saying it is not planning to raise rates for the foreseeable future, bonds are not an attractive investment. Likely places for the liquidity to go is into stocks and housing.

The Standard & Poor's 500 stock index closed Friday at 3,638.35, breaking the record set on Monday. The index edged +0.24% higher from Wednesday, and appreciated +2.24% from a week ago. The index of America's 500 largest publicly traded companies has gained +47.68% from its March 23rd bear market low.

Stock prices have swung wildly since the coronavirus crisis started in March and volatility is to be expected in the months ahead.

Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. It does not take into account your investment objectives, financial or tax situation, or particular needs. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. The material represents an assessment of financial, economic and tax law at a specific point in time and is not a guarantee of future results.

This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.

Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.

Americans Sit On A Mountain Of Cash Amid Pandemic

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