Truthfully, what knocks me out is that all these brilliant economists think that tossing everybody $500 will have a significant long-term positive impact on the economy. I say this because the evidence is that in spite of the current situation and future predictions, people are going deeper into consumer debt than ever. Back in the "good old days" (maybe a year ago), the average family's credit card balances came to something north of $9,000. I cringe to think of what the average must be now.
And in radio soundbites from our brilliant fellow Americans over the last few days, in answer to the question of what will you do with your $500 windfall, we get answers such as "Buy something, I guess."
At some point somebody is going to have to start protecting people from their plastic. I suppose "buying something, I guess" might provide a short term stimulus, but in the long run it's gonna be like those gift cards you get at Christmas. When you take them to the store you always buy more than the face value of the gift card, and the rest goes on your credit card. The evidence is that if you give Americans $500, they'll spend $700, and that's the piper that this country is eventually going to have to pay--with heavy interest.
The best advice still is unless it's for the roof over your head or (in some cases) the car you drive, if you can't afford to pay cash, you can't afford it. If that means postponing cruises or any other luxuries, well, so be it.