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Consumer Credit VS Capital Credit

Consumer credit on one hand, is easy to get. Fill out a few online forms and unless you have some real financial problems you’ll receive your very own, personalized, plastic credit card along with all the accompanying literature (lots of fine print) within days.

With consumer credit in hand you can buy anything from gas at the pump, to beer at the ballpark, or a college education (student loans sound familiar to anyone?). A consumer credit card company wants you to buy all kinds of things on credit (often at ridiculously high interest rates – formerly called usury), to pay later, while piling up a mountain of debt that will allow the lending institution to make you work for the rest of your days in order to pay off your debt to them.

In Contrast – Capital Credit…
On the other hand, capital credit allows you to purchase wealth producing capital assets (i.e. land, machinery, buildings, corporate stock), to pay back the loan at a reasonable rate until you own the asset outright, and are reaping the full financial benefits of owning wealth producing capital. Done right, the loan is paid back out of FUTURE EARNINGS (i.e. dividends) instead of the borrower’s own pocket.

Capital credit however, is much harder to get (try buying a house sometime) than consumer credit. Generally speaking, borrowers must be able to prove they don’t need the money (meaning they have ample collateral with which to back the loan) before the lending institution agrees to anything. The result is that most wealth producing capital assets that yield lucrative dividends to their owners are accessible ONLY to a small percentage of people – the 1{9198332639182e13dab42b9ea1f4c116af819992db0fa97f6ccd85a5ba1453c0} to 5{9198332639182e13dab42b9ea1f4c116af819992db0fa97f6ccd85a5ba1453c0} who can prove they don’t need the money.

Almost everyone else is effectively left out in the cold when it comes to accessing capital credit and owning wealth producing capital assets. This is the basic reason for the wealth gap that’s transformed America’s democracy into a 21st century American oligarchy.

Enter Kelso and Adler
Enter a gent named Louis O Kelso, who back in 1958 published a book entitled “The Capitalist Manifesto,” in which he (and co-author Mortimer Adler) suggested that every American citizen should have access to capital credit with which to purchase wealth producing capital assets at reasonable interest rates and in the process actively participate in (instead of being left out of) America’s highly productive free market economy.

Such a strategy according to Kelso and Adler, would democratize a free market economy. Such a strategy would maintain the private ownership essence of the free market while preventing the monopolistic tendencies that have historically undermined political democracy in laissez faire capitalist economies. In other words, it would save the free market from its own historical tendencies to self destruct.

By democratizing the free market (while creating lots of demand via a second “investment income” for every citizen*) and systematically reducing the malignant wealth gap, Kelso and Adler predicted an economic expansion even larger than the one that followed in the wake of Abraham Lincoln’s Homestead act of 1863 which gave every American citizen 160 acres of land (one kind of wealth producing capital asset), if they were willing to take care of it. But where land is finite, business opportunities and corporations (as well as the economic possibilities) are infinite.

Oligarchs Successfully Marginalized Kelso/Adler
The oligarchs however have successfully kept a lid on Kelso and Adler’s revolutionary ideas and to this day most of the public actually thinks there are ONLY 2 choices when it comes to economics. There is the historically right leaning, free market, laissez- faire capitalist approach of the Republicans. And there is the historically left leaning, labor union favoring approach of the Democrats.