"Just an Idea"

UPDATE: I keep meaning to come back and clean this post up, but there's so much other fun stuff to write about that I keep getting distracted. At any rate, as my Uncle Mark points out in the comments, the math here ain't quite right. But the idea's still an interesting one. Irrelevant, perhaps, but interesting.
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From a friend of a friend:

Rather than debating how to spend Americans' tax dollars ($700,000,000,000 to be exact) to "bail out" a flawed and failing Wall Street, its group of insiders, and greedy opportunists, I suggest that our government give each and every taxpaying American $700,000 instead. Americans can then take that $700,000 and use it to pay off their mortgages and any (if not all) of their own personal debt. Americans will more than likely still have money left over after paying off all their debt to "stimulate" the economy, put it into to their personal savings accounts, or choice of investments. I do think, at this juncture, we are less prone to foolishly spend our hard earned tax dollars except for the right reasons, and not for someone else's bad business practices and personal greed. Let Wall Street sink or swim on its own. Just an idea.

It took me a minute to really appreciate the numbers. 100 million tax-paying Americans. $700K apiece. That's some serious grassroots purchasing power.

Any economists out there? What would happen if we all paid off our houses, cars, credit cards, medical bills, and college loans next week? Would the banks recapitalize and be able to lend money again, as is the stated goal of the federal plan? Or would the very sudden shock to the system present short- and long-term effects that are actually negative?