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Author Topic: Financing your NH home  (Read 3905 times)

Robert

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Financing your NH home
« on: October 09, 2003, 04:06:14 pm »

I have been considering what at first glance appeared to be major dilemma, but what on further reflection may in fact turn out to be a major opportunity in the battle for freedom.

1.  The Scam (how bank loans are created):  
   
At issue is the fact that most people will need some form of mortgage financing to enable them to purchase a home the land of our dreams.  Going to a “conventional” bank which is a member of the Federal Reserve Cartel for these loans would play right into the hands of the puppeteers.  Remember that under the Fractional Reserve System these loans are funded with checkbook money.  For those of you who don’t understand this technique, here is a brief description of how it works:

• First your mortgage IOU is recorded on the bank’s balance sheet as an ASSET.
• Next, they issue to you a check, which is entered as a LIABILITY.  
• When you deposit that check to your bank account the amount is entered on the bank’s balance sheet as an ASSET and therefore cancelled.
• When your check to the seller of the house clears, it is recorded at the seller’s bank as an ASSET and at your bank as a LIABILITY.

What the bank has just done, is to borrow from you your future labor in the form of an IOU, and then turned around and loaned it right back to you.  I know, you thought they were loaning you some other depositor’s money.  NOT.  This is the bank part of the conspiracy.  This neat little trick allows them to create new “check book money” literally out of thin air.  The effect on the economy is that the money supply has just been increased by the amount of your loan, or to put it differently, the total purchasing power of all US currency in circulation has just been reduced by the amount of your loan.  Conversely, if you pay the loan off, the money supply is reduced by the same amount and the purchasing power of the dollar will have gone up by that proportionate amount.

If this seems a bit confusing, don’t feel bad.  It is a pure flim-flam which you or I would never get away with.  In the mean time, the bank gets to collect interest from you for loaning back to you the check book money they created with your IOU.  No wonder there are so many smart people who want to be bankers.  Banking is literally a license to print money.  Don’t you love it?

Now, does it surprise you that we are constantly being urged to borrow?  This by the way (the fact that our money supply is expanded by debt) is one the principal reasons why real estate prices are continuing on an ever upward spiral.  Does a 4 bedroom bungalow in Laconia, NH have twice the intrinsic value (measured in ounces of gold) today than it had 10 years ago when it was brand new?  Of course not!  At best, it may have retained it’s original intrinsic value because the deterioration of the building and obsolescence of it’s appliances may have been offset by a slight increase in intrinsic value of the land (supply and demand at work here).  

2. The Dilemma:

The bind we now find ourselves in is quite simple.  By moving to NH and buying up property in droves, we are playing right into the hands of the master puppeteers, if we finance our move with loans form Federal Reserve member banks.  We will have created the hope and appearance of Freedom, while at the same time having perpetuated our status as indentured slaves.  In reality very little will have changed.  As a society, we will still be subjugated to the same masters as before our much heralded move to Freedom in NH.

3. The Solution:

The obvious long term solution is to avoid any debt which is financed in this manner.  One way to do this is to avoid/eliminate debt altogether.  This is actually much easier than most of us think it is, but it does require the will to do so.  I was able eliminate all my debt in just a few years.  More than anything I was able to do this by rethinking my priorities and reducing my lifestyle.  An example is that I resolved never again to buy what I can’t pay for in cash unless I can arrange a (private) loan from a source which I know not to be directly connected with fractional reserve banking.

When I look for housing and cannot find such credit, I will instead rent from people who own the property outright or who are using my rent to eliminate their debt.  At least I know that I am not contributing to the perpetuation of the Scam.  Better yet, I am actually partnering with my landlord in reducing the money supply by helping him reduce his bank debt, whereby we are jointly contributing to a proportionate increase in the purchasing power of the dollar!

Individually, we must therefore examine very carefully our own priorities and find ways to significantly reduce our lifestyles.  One interesting surprise for me was that, having gone through this process, I actually feel much wealthier today than I ever did when I was keeping up with the Jones'.

Collectively, we must come up with ways to find and/or create sources of financing outside the Federal Reserve banking Cartel.

It is my belief that the degree of our success in eliminating any and all dependence on the fractional reserve banking cartel will be among the determining factors for the ultimate success or failure of our Free State enterprise.  Yes, there are of course other factors which will be just as critical, but success in all those areas will be for naught if we do not face the masters of the fiat money cartel, who are our greatest enemies and decisively defeat them where they live.
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The oldest political error: Because *everyone* wants something, government must provide it.
If the error is pervasive, the result is a society of totally enslaved people.
If the error is completely uprooted, the result is a society of totally free people.[/glow]

mark

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Re:Financing your NH home
« Reply #1 on: October 09, 2003, 10:59:22 pm »

I brought up this issue in the Build an earthship? thread.


I suggested doing something like this:

1,000 porcupines invest $1000 each (or 2000 porcs at $500 each) to a $1,000,000 fund at a flat service fee of 20% to be collected as their "interest" (20% is actually very high for this type of deal but I would be willing to pay it).

20-40 units along with central community services buildings and private utilities could be built at an average $25,000-$50,000 per unit (these aren't permanent dream houses here people, just high efficiency apartments and such).

Equity-rent payments between $500-$1000 per household (20-40 units) would yield $20,000 per month and $240,000 per year which would pay off this loan in only 5 years with a return of $20000 and full home equity ownership for the first 20-40 households. Monthly payments could be returned to the investors or either reinvested in new construction ($20,000 a month). Ofcourse many potential households would have their own larger savings and current home equity to bring into building such a housing development.

Labor could also be invested. Assuming a typical hourly wage of $20, I, for example, could be willing to labor for a minimal per diem to cover living expenses (and perhaps one of the first apartments to be built?) or 25-50% ($7.50-$10) per hour to be paid with perhaps a 25% return (total $25 per hour) monthly on a longer time scale.

A major reason for all of this is to avoid the politics and destructive effects of aquiring and paying off compound interest FedRes loans. Let's cut out the middleman and opperate like a real community. Renting doesn't build equity and the downpayment barriers to ownership are too much for even many "capitalist pig" libertarians like myself.  
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Robert

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Re:Financing your NH home
« Reply #2 on: October 11, 2003, 08:25:46 pm »

Mark,

Sorry for not responding to your post earlier, but what little time I had available these last few days has been taken up by the tussle on my "Sine Qua Non" thread.

My only real issue with what you propose is that it not be initiated by our NH non-government (when we reach that stage) but instead be allowed to evolve together with other financing options as private enterprise solutions.  I have nothing against debt, as long as it is not based on any kind of fractional reserve system.

There is little doubt in my mind that all sorts of financing options will pop up.  My main fear is that many of our members will innocently consider financing their new homes through "conventional" loans with FedRes banks they are used to dealing with.

In keeping with the principle that in a Free State, "government" can only be defensive, the simple and most effective defense against the theft through inflation by the FedRes banks of our earnings and savings is to completely ban all fractional reserve banking practices in NH, i.e. make it illegal for any FedRes member bank to operate in NH.

The rest will take care of itself in the open market place.

One footnote:  It just struck me that borrowing from FedRes banks and then rapidly paying them of with Federal Reserve Notes purchased with one of our gold backed currencies might actually have the salutory effect of contracting the FRN money supply.  It would also be a neat way of getting out of debt very quickly and at their expense.  Oh, but this is delicious.  I have to think about this some more, but it is an intriguing thought.
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The oldest political error: Because *everyone* wants something, government must provide it.
If the error is pervasive, the result is a society of totally enslaved people.
If the error is completely uprooted, the result is a society of totally free people.[/glow]

mark

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Re:Financing your NH home
« Reply #3 on: October 11, 2003, 08:55:38 pm »

My only real issue with what you propose is that it not be initiated by our NH non-government (when we reach that stage) but instead be allowed to evolve together with other financing options as private enterprise solutions.  I have nothing against debt, as long as it is not based on any kind of fractional reserve system.

Absolutely, I assume this financing model would be funded by private interests joining together in a voluntary cooperative effort. But I would like to see the Porcupine leadership give it's blessing as an example of what Porcs can do in New Hampshire to solve societie's problems with private initiative.  ;)


Btw, I started thinking about this issue when I found this website a few months back: Monrobey.com - Consumer Sovereignty. The website is kinda funky but it brings up some interesting issues.
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