Given the increase in the supply of money from the Fed is it really a surprise that the velocity has dropped?
I would have expected an increase with people being afraid of inflation. Hyperinflation isn't merely an increase in the money supply, it is an increase in velocity as people want to get rid of increasingly worthless paper to get real items. In Weimar Germany workers would be paid twice a day and often wives would pick up their husbands' pay at lunch to buy groceries before prices went up more.
I guess the fear of debt outweighed the fear of inflation. Too bad the Nine Trillion Dollar Man didn't share that fear.