An exploding monetary indicator suggests that investors could be fleeing European banks amidst the debt crisis for the safety of America, according to the economist and television pundit Lawrence Kudlow in a New York Sun column yesterday.

The M2 indicator, which tracks cash, demand-deposit checking accounts, savings deposits, and retail money-market funds, is up 24.2 percent at an annual rate over the past two months, according to data provided by the St. Louis Fed. This monetary explosion might suggest Europeans are withdrawing from their own banking system and putting their cash in American banks that are guaranteed by the Federal government, Kudlow said.

This is a disconcerting development. Normally, big M2 growth would signal a faster economy, and maybe even higher inflation. But as economist Michael Darda points out, the velocity, or turnover, of money seems to be plunging, writes Kudlow.

What's plaguing the stock market, which plunged yesterday, are fears about the safety and solvency of European government debts and European banks. I still don't believe it's 2008. But yes, like everyone else, I'm worried, he wrote in the New York Sun.

Still, writes Kudlow, American banks and corporations have loads of cash on hand. If America can roll back the over-regulation of the financial system and the government's misguided fiscal policies, all that cash can be used for corporate innovation, bank lending, and the economy will get humming again, he said.