Sorry, I'm not sure I buy that explanation. It's what the top-down folks are saying, but plainly, and perhaps naively, I just think of what credit is used for - to buy what you can't with cash. Giving everyone cash would filter up to businesses; mortgage payments to brokerages, savings to banks, investments into the stock market and bonds, and purchases to retailers including automakers. Americans would have to do something with that money and there wouldn't be the huge management/distribution fees that are now going to get collected. In effect, you'd be giving the American people a vote about where the money should go based on their everyday needs. And that huge of a sum wouldn't be as easy to fritter away as a $300 "stimulus" plan. Heck, at $7.4 trillion you could give every man, woman, and child over $20,000 (for argument's sake, ignoring infrastructure which would be a mistake).
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.
"the average family spent around 20 percent of their rebate in the first month after receipt." Which is not to say the rest was saved for the long term.
"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.
Fair enough. I also got another answer from someone far more knowledgeable from me: At least in the current plans, the government is getting preferred stock in return for their investment.
