I have used this strategic vacuum technique as a manager to great effect before.
It brings out the best creativity and allows people who are going through apparent productivity lulls to come out of them in a healthy, smarter way. It also builds lasting loyalty and a strong team spirit.
Velocity isn't just hours spent butt-in-seat or number of commits or whatever. It's precious moments of high quality attention. To maximize that you need to be more like a conductor of an orchestra than a drill sergeant.
CAVEAT: when under a high-pressure situation with a new team it is sometimes necessary to limit freedom, demand trust, and command things for the purpose of getting through that situation. Obviously it's dangerous and the wrong kind of manager can get addicted to this kind of solution easily. These temporary command-and-control moments can sometimes be used as trust builders for the managers if, once the situation is resolved, they immediately relinquish the extraordinary power they had used and return to a more natural/creative dynamic - the team will see this as honourable since it didn't technically _have_ to happen that way.