SRW is a monetarist, and therefore believes that somehow, the quantity of reserves banks trade with one another to clear cheques, impacts the aggregate demand, but has never been clear on exactly how. Here is his mechanism -- lower interest rates generate the "ever greater inducement of ever less solvent households to borrow in order to sustain adequate demand" -- because how else can it work? And the biggest ticket item households can leverage against is real estate, so housing is the closest you can come to for a monetary mechanism.Winterspeak.com
There is a simpler way for the Government to stimulate aggregate demand: higher deficits through lower taxes of more spending, depending on your politics. When you are a currency issuer, you don't borrow to spend, you simply spend the currency into existence, and tax it into non-existance if you spend too much.
Interfluidity: Borrowing is a feature, not a bug