When you talk about Capital Homesteading credit the first question that always pops up is, Where does all the money come from The answer is, it comes from the government of the people, by the people AND for the people, via the Federal Reserve (which has the right to extend credit as it sees fit). And yes, it does create (FHA like) red ink, but the red ink

(a) is not repaid from taxes, savings or wages,

(b) has a well defined, systematic exit plan of how to get in and get out (kind of like Operation Desert Storm) of that creditloan

(c) it has a productive purpose.

So the real issue IS NOT where does all the money come from The answer to that question is always the same. The real issue is what's the difference between PRODUCTIVE and DESTRUCTIVE uses of credit, and their effects on individual citizens, and the economy in general. So let's talk about the ways that credit can be used productively, and the ways that credit can be used destructively. Let's talk about how we can embrace the first, and eliminate the second.

Many people, for example, are convinced that a formal college education is the key to economic success in the modern age, so they're perfectly willing to help their kids pay for (often in the form of extended credit) that college education because Mom and Dad see it as investment in their kid's future...a PRODUCTIVE investment.

The Big Bank however, sees this college education in a different light when they extend (consumer) credit card offers to college kids across the country. So, what does Joe College purchase with that credit card Boom boxes, CD's, DVD's, MP3's, video games, gas for daddy's car, a six pack of beer for this weekend's party, and other essential items required by the modern collegiate learning experience.

Big Bank And Joe College VS...

Hey, don't get me wrong here. Big Bank knows exactly what it's doing when it extends that credit offer to Joe College. They've carefully studied all the data, and they've concluded, based on empirical evidence, that this particular marketing strategy is profitable for them. In other words, before they ever extend this credit offer to Joe College, they know that they will make their money back and lots more...or else they would never do it. It's a good bet. It's just as simple as that.

Capital Homesteading And Johnny Paycheck To Paycheck

Let's contrast Joe College's credit offer from Big Bank with the concept of extending a Capital Homesteading credit to Johnny Paycheck To Paycheck. What you'll find is that the credit extended to JPTP cannot be spent on non-productive consumer crap. On the contrary, it must be spent on a well-vetted, productive capital (i.e. stock) purchase, the kind that the conservative local banker (not some wild, dice rolling venture capitalist) would advise his local bank to purchase.

The loan will be repaid not from taxes, and not from JPTP's wages or his salary, but from tax deductible dividends generated by the productive capital (i.e. stock) purchase. This will take an average of seven years to pay off, at which point JPTP becomes the proud owner of a real live piece of the rock. He becomes a capitalist.

If done annually over a lifetime, JPTP will generate an earned income to augment his wage or salary. He will also create a privately owned and controlled nest egg that will free him from ever having to depend on the government (i.e. social security, medicare, medicaid) to take care of himself and his family...which by the way, will also unload the government and justify TAX REDUCTIONS!.

Now like the boys from Big Bank, the local banker will have studied all the data and will have a real good idea what the odds of repayment are going to be, before he ever advises JPTP to place his investment bet. Actually the odds of repayment are much better with JPTP's Capital Homesteading credit than with Joe College's consumer credit.

Consumer Crap VS...

There is one much more important difference however. The difference is that the purpose of Big Bank's Joe College marketing strategy is to get JC hooked on the consumer mentality of easy (buy now pay later) money, and in the long run, to program him to believe that it's completely normal to exchange his long term financial freedom for immediate gratification when it comes to consumer crap that he wants to have right now. Once he's fully programmed, Big Bank will wrap its financial tentacles around Joe College, who will then be transformed into the Big Bank's profit producing mule for years to come.

A Legitimate Piece Of The Rock

On the other hand, the Capital Homesteading credit, as we've already said, must go toward winning Johnny a piece of America's growing economic pie, a piece of the rock that will predictably pay itself off, and in the process, begin to transform Johnny Paycheck into a capital owner who has a vested interest in the future of a particular company, in a particular community, in a particular county, in a particular state, located in the United States of America. So what we're talking about here is a DISTRUCTIVE (consumer) use of credit, compared to a PRODUCTIVE (capital homesteading) use of credit.

Let Freedom Ring...

And as his productive piece of the rock grows year after year, JPTP will begin to feel the chains of his wage slavery loosen, and the bell of financial freedom ring louder and louder, until he's finally able to sing right along with Martin Luther King himself, free at last, free at last, thank God, I'm free at last.

In the lobrng term big picture the Capital Homesteading strategy is specifically designed to create a nation spilling over with more and more capitalists who are actively participating on the ownership side of the free market economy, instead of a nation spilling over with more and more workers who are effectively cut off and alienated from the modern economic miracle known as the free enterprise system. The Big Bank strategy is specifically designed to create programmed automatons who unknowingly trade their financial freedom and future in for consumer crap, and who, as the result can be easily controlled and dictated to by the captains of industry from their high rise corporate suites up on Wall Street.

It's Our Choice

So I guess the choice comes down to...do you really want to underwrite a free enterprise economic system, and transform America into a real capitalist nation chock full of real live capitalists Or do you prefer to create a nation that's primarily full of workers (sounds communisticcapitalistic to me), who are systematically required to compete tooth and nail with each other, driving wages lower and lower (let's become a third world nation ASAP, or redistribute from top to bottom in order to temporarily prevent the economy from falling flat on its face!) so that the captains of industry can oversee their respective monopolies without really having to concern themselves with legitimate competition. That way they can all get together, buy out the little guys, fix prices, fix elections, smoke big Cuban stogies, drive their fancy cars, and generally live off the fat of the land. Yes Tonto, I guess you could turn the clock all the way back to them thrillin' days of yesteryear, if you wanted to. But do you really want to

P.S...Viva Las Vegas!

I have one final thought to offer here. If all those incredibly bright and intelligent, bureaucratic bean counters in Washington, DC are simply unable to recognize a good bet when they see one, then I know there are plenty of folks out in Las Vegas who don't suffer from that same moronic, myopic malady. I mean it's their business to assess the odds accurately, facilitate the bet, and they make lots of money in the process. They do it every day of the year, and twice on Sunday.

Yah sure, I know you're going to tell me that those folks out in Vegas are all crooks. But that comment simply begs the question. How does that make them any different than the crooks in DC Now, if you're unable to come up with a believable answer to that last question, I suggest that we consider taking bids from both DC and Vegas. If Vegas wins, we'll just call it...outsourcing.

Joe L. Buckett is a Chicago based, freelance writer who in 2004, was our nation?s first virtual candidate for the Presidency of the United States. If you're interested in learning more about Joe Lunch Buckett?s common sense solutions to 21st century problems, ranging from the war in Iraq, to Social Security, and Immigration, check out his book entitled The Big Idea, which you can order on either Barnes and Noble or Amazon.