The WSJ says: “Some big U.S. banks are starting to increase their lending to businesses as demand for loans rises and healthier banks seek to grab customers from weaker rivals. After declining steadily for most of the past two years, the amount of commercial and industrial loans held by commercial banks inched upward during the past two months, according to the Federal Reserve.”
As I understand the situation, here is where the trouble begins. The money supply has not increased dramatically but bank reserves have. Loans turns reserves into hot money and this is what fires up the flames of inflationary finance. The paradox here is interesting to consider: there is a greater danger to recovery than continued recession.