Late last month, we moved fast and became one of the hundreds of thousands of Americans who trashed a clunker as part of the government's Cash for Clunkers program. Thanks to the government subsidy, we received more than $4,500 for our 1998 Ford Explorer, well more than the $1,000 we would have received without the stimulus program. And we may have as much as doubled our gas mileage with our new Chevy HHR (pictured below with Max, who apparently likes his new cat toy.)

Increased fuel efficiency. Added economic stimulus. All of that I knew. What I didn't know until reading this week's Economist is that by taking advantage of the government program we may have helped burst what John Maynard Keynes called the "liquidity trap."

According to his theory, consumers may become so worried about the economy that they cling to as much liquid wealth as possible, cutting their spending sharply and thereby triggering precisely the slump they feared.

The Economist endorses the Cash for Clunkers program and says it is a piece of stimulus well worth its salt from an economic perspective. Less clear, the article says, are the environmental benefits of the program, but on this question let's look at the numbers (and related commentary) released by the Department of Transportation earlier this week:

• Cash for Clunkers transactions are generating a 61 percent increase in vehicle fuel economy. The average fuel economy of new vehicles purchased under the program is 25.4 MPG, and the average fuel economy of trade-ins is 15.8 MPG. The average increase in fuel economy is 9.6 MPG, or a 61 percent improvement.

• Thus far, 83 percent of trade-ins under the program are trucks, and 60 percent of new vehicle purchases are cars. The program is working far better than anyone anticipated at moving consumers out of old, dirty trucks and SUVs and into new more fuel-efficient cars.

• Cars purchased under the program are, on average, 18 percent above the average fuel economy of all new cars currently available, and 63 percent  above the average fuel economy of cars that were traded in. This means the program is raising the average fuel economy of the fleet, while getting the dirtiest and most polluting vehicles off the road.

We also paid almost $700 in sales tax on the new car. Multiply that by hundreds of thousands and perhaps millions of car buyers (if the Cash for Clunkers program receives new funding) and the cash infusion into horribly depleted state and local budgets suddenly becomes another powerful argument for the program.

The Economist ends its article by quoting NRDC friend Jack Hidary of SmartTransportation.org, who notes that "car dealers are now advertising the 'total cost of ownership' of vehicles, not just the purchase price, drawing the attention of consumers to differences in fuel efficiency between vehicles and estimating how much it would cost to fill them up with gas each year."

Busting the liquidity trap. Increasing the fuel efficiency of the national auto fleet. And changing the way that Americans look at the lifetime cost of their cars. Where's the downside?