What is cash on the sidelines?

Don't look at the absolute amount of cash and cash equivalents in circulation if you want to gauge how much buying power there is. Look at them relative to stock market capitalization.

TLDR Summary

• The total amount of money market funds outstanding is not cash on the sidelines. It can’t be converted to stocks by investor choice because every seller of a money market fund needs a buyer.

• It’s better to think of low risk assets as collateral for high risk assets. The higher the ratio between the outstanding balances of low risk and high ri…