Credit is "frozen" now b/c banks won't lend, in some cases not even to each other, over fears that the borrowing institution is not going to be able to pay back the loan.

So the $7.4 trillion posted by the government is more about restoring confidence than anything else.

There are some good papers on the subject by Stephen Figlewski at http://pages.stern.nyu.edu/~sfiglews/FinCrisis.htm particularly the one titled "Viewing the Financial Crisis from 20,000 Feet Up".

That was the assumption behind the last stimulus plan, too, but it turns out only 10% to 20% of it was actually spent (http://online.wsj.com/public/resources/documents/WSJ-2008Sti...)

Even if people did spend the $10k you'd like to give them, it wouldn't make a dent in terms of home or auto sales unless there was financing available, too.

"Low wealth households households that reported not having at least two months in savings in case of an emergency also raised their spending more than the average household when the rebate arrived."

"Our findings underscore the potency of the economic stimulus payments in stabilizing consumer spending during recessions."

This would suggest a trickle up vs trickle down economy where a stimulus package targeted at poor people would have the greatest impact.

PS: Poor people spend more of their money than rich people film at 11.

Yeah, duh, but even if you gave poor people $20,000 and they spend it all, how does it do anything about the housing crisis?

Without lending, that $20,000 won't change the market at all.

PS: That may or may not be a joke I can't tell.

Granted, the only thing that will fix anything is time. The $7.4G is a handout for bonuses and capital for the well-connected to position themselves for the next bubble (snatch up all assets while they are undervalued). Increasing the debt only hurts the economy as a whole.