As far as I understand it, the only thing (in this case) that stimulates the economy is spending. There are three primary factors that go into the economy in the most basic economics class sense: consumer spending, government spending, and investment (capital investments, not investment in the stock market).

If you spend your $1,200 on something like a good or service, you put money into the hands of a retailer or service provider, who then employs someone. Those people then go spend money, and that helps other people stay employed. Oh yea, the whole way the government collects taxes.

Paying down your debt, in this case, would not bolster the economy as it doesn’t have a trickle down effect.

True, putting the money into the bank will help the banks, but the sole purpose of the bank is to lend the money out. With credit standards tightening, that may not be the easiest thing.

My two cents. I am not an economist, I am an ignorant blogger. Feel free to rip my argument to shreds!

This is really nice for those that don’t pay much, but how do you think people like me feel who work 60 hours a week and pay our fair share then turn around and have our tax money redistributed for others to spend

@Tom – My concern is that if everyone thinks like this, the whole intent and purpose of the plan becomes diluted or even not effective at all.

Understand, I am not looking for an excuse to just spend, I’ve moved well beyond that. Just want to be a good citizen and help where I can.

The points about saving and paying on your credit cards also helping the economy do have me thinking though. Need to do a little more digging and reading.

I’m not saying put all the money to pay off debt, just that if you want to spend it, spend it for yourself – not for the economy.

Mike