Is There a Way Out of the ‘Liquidity Trap’?

The video discusses the challenges of policy transmission to the real economy, focusing on negative interest rates and quantitative easing (QE). It highlights the limitations of these tools, such as banks passing costs to consumers and the ineffectiveness of negative rates in stimulating borrowing. The discussion includes historical examples, like Japan's long-term low rates, and explores alternative measures like helicopter money. The video concludes with the notion that central banks need more creative solutions to address economic stagnation.

What is the significance of the 'velocity of circulation' in the context of the text?

According to the text, what is the current state of the economy in relation to borrowing and spending?