Curious about your "1965 velocity level" point. Haven't heard that. I guess that seems plausible, but I would like to see the data on that. I mean, velocity, as I'm sure you know, isn't really possible to capture (this is actually the beauty of bitcoin, it can be captured there).... velocity is often thought to remain pretty stable. If it's being calculated from the equation via other variables, there's problems there too, since inflation, gdp and even MS are all calculated differently then they once were (in 65). Yet, it should also be pointed out, if your using the variables and the equation to calculate velocity, your clearly saying the equation matters.
Velocity crashing due to QE.
http://www.zerohedge.com/news/2013-10-21/qes-gross-misallocation-capitalSo the fed pumps money in, expecting velocity to stay constant, but it doesn't. Fisher was wrong. There at times when even near zero rates will not cause credit growth to increase.
So what do they do? Force feed credit gavage style to students, automobile loans, corporate debt to fund buy backs, REO to buy property, property refinancings, margin debt and of course government debt.
Sure they are going to succeed for awhile. Then it's going to blow up in their faces all over again.