Studies have shown that if you put money into the hands of the masses, they're most likely to spend it, rather than save it. So the point of the stimulus packages, as I understand them, is to get that spending rolling again, so that demand for products is up and employers have to hire more people to increase production, in order to meet the new demand.
But looking at this another way, maybe the stimulus packages are too little, too late. The stimulus money used to pay past-due payments on mortgages, cars, and credit cards does little to actually increase consumption and create new jobs. It simply goes back into the banking community, to finance CEO bonuses and such. And money put into savings simply goes to the banking community as well, to only resurface as new debt...which, with employers laying off more workers, fewer are qualifying for new borrowing because they don't have a job to pay back those loans. Then credit tightens, and interest rates in general go up...discouraging new borrowing, and tightening lines of credit for existing businesses...as we've already seen in recent weeks and months.
In our mass-market oriented society, only when the masses feel that the can freely spend, and that they have--or will have--the means to cover what they spend [call that "consumer confidence"], will our economy recover significantly. If people decide to be prudent and cut or eliminate their non-mortgage debt, it'll take longer for the economy to recover...but the economy will be healthier in the long run.
Debt and credit are--and have been for a long time--the most heavily-marketed product in America. When/if things turnaround, for our economic proisperity to be sustainable, cash will of necessity have to be king once again...JMHO.
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