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.

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