Yet another transmission failure...

Part of the dilemma facing authorities across the globe, and more specifically in the U.S., is to find a way to get consumers to start spending again. After all, consumption represents something in the region of 70% of GDP and therefore is central to any plan attempting to revive the economy.
Unfortunately, the household spending stimulation plan seems to be suffering from a similar ailment to that of monetary policy, namely a total breakdown in the transmission system.
To resume, monetary policy, especially in the U.S., has become completely impotent, not only because of the "liquidity trap" phenomenon in which room to maneuver disappears once interest rates come close to zero, but also because widespread distrust and lack of confidence in the marketplace meant that even when rates were not close to zero and were being cut aggressively, the various participants preferred to stay on the sidelines.
And now, it can be argued, we are observing a similar phenomenon in the household space. Part of the government stimulus plan is to revive household consumption that has been rapidly retrenching on spending. It is highly unlikely that they will succeed in this mainly because the largest spending segment of the population are made up of the so called baby boomers. This segment of the population are reaching retirement age and the economic crisis has erased a large chunk of their accumulated wealth, forcing many of those that were hoping to retire to get back into the workforce. Unfortunately jobs are scarce right now and are expected to become more so in coming months. So even if money is handed to them just as they were to the banks, it is unlikely they will be spending any of it. With rampant negative savings amongst households, it is more likely that they will be using the extra cash to rebuild their savings, just like in the case of banks where the money they received to revive lending was instead used to build reserves against their bad debts.
This begs the question as to how the authorities can possibly hope to revive the economy in light of these structural breakdowns? There is no doubt that the cycle will eventually reverse itself as the environment normalizes but to expect a revival in the next couple of months, I think, is just wishful thinking.