TIB Financial Corp.

I thought I was seeing things yesterday.

The Federal Reserve released its weekly numbers on U.S. bank lending. And it looked like there had been some kind of mistake.

Outstanding loans and leases at U.S. commercial banks jumped by a staggering $420 billion in the week ended March 31. An unprecedented leap.

Something unusual happened the last few weeks.

Bank lending in the U.S. didn't fall significantly.

Since the onset of the financial crisis, outstanding loans at U.S. commercial banks have been in a freefall. Over $600 billion in loans have been repaid or defaulted on. Representing an 8% contraction in credit.

US Bank Loans & Credit Chart

The shape of this economic recovery will not be in a “V”, as many pundits have promulgated, but instead may be the inversion of that letter…which will unfortunately look much more like a tepee. The upcoming downfall will surprise most investors who have been tricked into believing that a government can print and spend their way into prosperity.