Introduction

Utopian Financial Infrastructure, introduces and describes a new financial infrastructure that is necessary to support and implement the ideas mentioned in Building Utopia book.

Why do we need a new financial system? Our current financial system has evolved over several millennia, and it has accomplished many good things. But, it has many deficiencies. The current financial system is inadequate for implementing the ideas mentioned in Building Utopia book; in fact, it is not even close to achieving adequacy. A few tweaks or enhancements to our current financial system would not make it adequate. The current financial system simply cannot serve as the financial infrastructure for any Utopian society.

Utopian Financial Infrastructure is about money, wealth, ownership and accurately accounting for it.

From the perspective of "leading a good life", money or wealth is not the end in itself, it is merely a means to an end. While money and wealth are not sufficient for us to lead a good life, they are necessary to enable us to have the good life that we seek. This book focuses more on these "means". Without a supporting infrastructure, we all cannot have a good life.

Thus, we will discuss ideas like money, wealth, assets, ownership, transactions, payments, money transfer, lending, borrowing, investments, mortgages, etc. The Utopian Financial Infrastructure must also deal with international aspects of money. In this context we will discuss gold dollars, fiat currency, mechanisms for fair and balanced foreign trade, visas, international travel, and dual citizenship.

This chapter has two goals:

The first is to introduce the core idea on which the Utopian Financial Infrastructure is based.
The second is to introduce all chapters in the book.

These chapters fall into two categories: local and international topics. By the end of this chapter, a reader would have high-level information about the contents of this book.

The Core Idea

Before we proceed, you should know that we will use the phrase "we need to know" very frequently. In order to implement the systems described in Building Utopia, we really "need" to know. This is not about "wanting to know" or "it would be nice to know".

To implement the ideas mentioned in Building Utopia, we need to know "who owns what". Thus, we need to be able to identify the "who" and the "what" and we also need to establish the ownership relationship between the "who" and the "what".

The "who" refers to the legal entities that can own something. There are three kinds of legal entities: citizens, self-owning entities, and organizations.

The "whats" are the things that we own. These things usually have a monetary value or financial consequences - such as liabilities or income streams. Generally speaking, we call these things "assets", but these "whats" are not always as simple as the idea of an asset, as they can be a combination of an asset and a liability.

We need to know every conceivable thing that can be owned. Loosely speaking, these are all the products within a society.

Ownership is an association between an entity and an asset. Conceptually, the things that we own can be listed out, and that list could be very long. For example, one of the items on the list could be "money", and the number associated with that item tells us the amount of money we have. Another item on this list could be the number of ownership shares of some specific organization that we own. Yet another item could be the number of cans of a specific kind of soup we own. Such a list is called an "inventory".

That is, we need to know all the things that each entity in a society actually owns. That is, for each entity, we need to know their inventory of items.

Next, we need to know how the inventory of items changes.

Every day, people engage in exchanging the things that they own. People may buy some things and people may sell some things. People may work for others and earn a salary. People may take ownership of some investments, and may sell some of their investments. All these activities change the records of inventory of the things that we own.

For example, when we purchase a can of soup at a retail store, we exchange some of our money for the can of soup. This purchase reduces the amount of our money, and increases the number of cans of soup we own. This purchase also reduces the number of cans of soup from the retailer's inventory, and increases the amount of money for the retailer. Thus, our activity of purchasing a can of soup from a retailer changes the inventory of things owned by us as well as the retailer.

These kinds of interactions are the financial transactions. We need to keep track of all financial transactions so that we know the most up-to-date ownership of everything that can be owned.

Almost everything that we own has a monetary value. For example, when we buy a can of soup, it has a monetary value; when we buy ownership shares of some specific organization, it has a monetary value. Initially, this monetary value is the price that we pay for the thing that we buy.

There may be some things we own that don't have an associated monetary value. For example, when we create a drawing for ourselves, we own it. We also hold the copyright for it, that is, we own the copyright. But at the time the drawing is created, we cannot assign any monetary value to it. Similarly, the monetary value for the copyright is not clear. The various kinds of certificates and licenses that we possess are examples of the things that we can own but have no monetary value. For all such things, we will assign them a monetary value of zero. If such things get sold, then they start having some monetary value.

The monetary value of the things we own can change every day. For example, the shares of a specific organization that we own may rise or fall in the stock market, and that changes the monetary value of the shares that we own. In the soup-can example, the can of soup has an expiry date, and on that date, it will be deemed worthless. From the time when we buy that can of soup until its expiry date, its value gradually decreases while it sits on our shelf. If we consume the soup in that can, its value reduces to zero immediately.

Next, we need to know the total wealth of each individual, and each entity.

We can know the "current" monetary value of each of these items by either knowing their current market value (like ownership shares of some organization), or by knowing their current depreciated value (like the can of soup sitting on our shelf), or by knowing that it has been consumed (like the can of soup that we used).

This idea forms the basis of the mechanism to measure our wealth; not just on some days in a year, but every day.

Thus, everything that we own has a monetary value, and this value can change every day. When we assign a monetary value to each of the things that we own, and when this monetary value is kept up-to-date with each passing day, then every day we will know the exact value of each of those things, and hence, the exact value of the wealth owned by each of the entities, and hence, the exact value of all the privately owned things in a society.

Knowing the exact wealth of every entity every day enables us to compute everything that was discussed in the Building Utopia book that depends on knowing the wealth. In short, we can compute the following:

We can compute the taxes owed by entities for wealth redistribution.
We can compute the exact amount owed by the society to citizens for wealth redistribution.
We can compute the taxes owed by entities for society's spending needs.
We can compute the monetary policy related taxes or disbursements.
We can compute the amount of monetary help that the society should provide a citizen when purchasing something essential.

Here is a slight elaboration of some of the above mentioned points ...

Knowing the total projected expenses for running the operations of the society, we would know the total amount of taxes that we need to collect. Knowing the total wealth means that we know the percentage rate at which the taxes need to be collected. Based on the percentage rate of taxes on wealth, and knowing the wealth of every entity, we would know the amount owed by each entity to the society as taxes to keep the society's infrastructure and services functioning.

Knowing the current privately owned total wealth in the society enables us to implement monetary policy. When total wealth of the society falls below the desired norm, we would know how much money needs to be created and distributed every day. When total wealth of the society rises above the desired norm, we would know what percentage of money needs to be taken out of the economy every day, and then destroyed.

Knowing the wealth of each citizen allows us to implement the Utopian Payment Model to help those who need in satisfying their essential needs. This implementation would need to engage every time a citizen needs to purchase something essential and that happens through a financial transaction.

The next step after knowing what should be done is to actually do it.

Society takes on the responsibility of making all these payments on our behalf. From our present-day perspective, we would call it "automation"; but in reality it is just software doing the work we design it to do. With automation, we implement the action associated with the computation. A Utopian society needs this automation. Automation works every day. All payments happen on time.

With automation, society pays all its citizens what is owed to them. Payments related to wealth redistribution and monetary policy occur every day; with amounts proportional to each day. Payments related to Utopian Payment Model happen at the time of a purchase. That is timely. Payments related to tariffs are discussed in the second half of this book.

With automation, society collects all taxes that are due. The word "taxes" means the money collected for wealth redistribution, for society's spending needs, and for the quantitative tightening part of the monetary policy. Citizens can specify the account from the taxes should be paid. With automatically paid taxes, citizens are relieved of the responsibility of doing all the work necessary to actually pay the taxes. With automatically paid taxes, evading taxes becomes impossible.

With automation, the concept of pending payment almost becomes obsolete, except for social credit, which we will discuss in the first half of this book.

The automation would happen at the end of each day. During this processing, we would automate the paying of bills and debts as well. Citizens will have configuration parameters that tell the automation how it should work, in this regard, for them.

This concludes the description of the core idea of the Utopian Financial Infrastructure.

Chapters on Local Topics

Much of the work that the current financial system does, and the Utopian Financial Infrastructure will do, is local to our society.

The chapters that deal with these local topics are few, and each one is long. The reason for this is that most of the aspects of any financial system (current as well as the Utopian) are immensely interrelated.

Here is what you will find in each of these chapters:

The chapter, Current Financial System, describes our current financial system briefly. We will identify all the major systems that we interact with while doing something, either with our money or with our wealth. Most of these systems will be changed in some way in the Utopian Financial Infrastructure. Many of the underlying ideas and concepts stay essentially the same; others change significantly. When describing the current financial system, we will describe topics that are important and widely used and also have some problems or undesirable aspects. Those problems or undesirable aspects will be remedied in the Utopian Financial Infrastructure.

The chapter, The Overall Approach, deals with the generalities of the Utopian Financial Infrastructure. It starts with motivations, treats the motivations as requirements, and develops the overall approach to achieving the various goals indicated by the motivations.

The chapter, Records and Accounting, introduces the basic kinds of records and database structures of the Utopian Financial Infrastructure. It introduces the ideas of Entity Registry, Product Registry, Account Books and End-Of-Day Processing.

The chapter, Logins and Transactions, deals with the following concepts: identification, authentication, confirmation, authorization and financial transactions. It deals with the actual infrastructure that supports numerous real-life activities, ranging from using our phone, to browsing the internet, to buying or selling something.

The chapter, Investments, obviously deals with ideas and concepts related to investments. The primary meaning of investment is owning means of production, and that primarily means being part-owners of publicly owned organizations. Investments is a vast topic, but at its core, it is related to organizations, their ownership, the accounting of that ownership, other financial products and services, and financial markets. This chapter establishes the basics and introduces the concept of Standard Investments, which is required to discuss Lending and Borrowing.

The chapter, Lending and Borrowing, introduces a significantly redesigned system of lending and borrowing. It introduces Collective Credit and Utopian Mortgage. It discusses the Social Credit introduced when discussing the Utopian Payment Model in Building Utopia. It discusses why, in a Utopia, citizens cannot ever get bankrupt. Finally, it discusses the lending and borrowing for organizations and self-owning entities.

The chapter, Other Topics, introduces several loosely related or even unrelated topics, each of which requires only a few pages worth of description, but each playing an important part in the overall financial infrastructure.

Chapters on International Topics

Utopian societies, like all others, engage in interactions. These interactions are typically initiated by citizens or organizations within the society. For any interaction involving money or sovereignty, the society is indirectly involved, and its financial infrastructure (that is, UFI) operates on its behalf.

Importing, exporting, international money transfers, travel, investments, and acquiring dual citizenship are all examples of societal interactions. Each of these activities falls under distinct international topics.

The chapter, Basis for International Interactions, discusses the ideas underlying all these international topics. The ideas are:

Boundaries and Independence
Sovereignty and Jurisdiction
Agreements and Cooperation
Caring vs Harming
Similarities and Differences
Unions and United World

For every international topic, we discuss ideas, make choices, develop concepts, and design systems. Each of these is heavily influenced by the aforementioned ideas.

The chapter, Foreign Trade, discusses two goals that foreign trade between Utopian societies should accomplish. These goals aim to mitigate potential harm in foreign trade while retaining its benefits. Additionally, we categorize all monetary transactions between societies. Some of these are related to foreign trade, and others are not.

The chapter, Foreign Trade in Precious Commodities, describes the mechanism that enables foreign trade in precious commodities. The mechanism contains both natural and tariff-based safeguards to ensure that such trade is conducted in a balanced manner.

The chapter, Currency Exchange Rates, discusses the concept and the computation of currency exchange rates between Utopian Societies.

The chapter, Money Transfer: Part 1, presents the mechanism of One-Way Money Transfer between Utopian Societies. It describes the money transfer mechanism which is required to continue the discussion about foreign trade. Other aspects of money transfer are discussed in the chapter "Money Transfer: Part 2".

The chapter, Payments Using Fiat Currency, elaborates on the Utopian meanings of the phrases "payment using fiat currency", "pay using fiat currency", and "paid using fiat currency". Even in today's world, countries issue their currencies by fiat; therefore, they are fiat currencies. So, these phrases have an implied meaning in today's world. We will show the differences between the Utopian meaning and the present-day implied meaning.

The chapter, Foreign Trade in Everything Else, discusses foreign trade in everything else other than precious commodities. We discuss payments associated with such foreign trade and also the tariff-based mechanism to ensure that such trade happens in a balanced way.

The chapter, Money Transfer: Part 2, continues the discussion from the "Money Transfer: Part 1" chapter. It discusses aspects of one-way money transfer that are related to limits, restrictions, loans, taxes, monetary policy, physical assets, and soliciting help.

The chapter, International Online Purchases, explores various aspects related to International Online Purchases. Specifically, it discusses what can be purchased, how payments are made, applicable tariffs, ownership records of purchased items, purchase limits, and other restrictions.

The chapter, International Investments, explores key questions such as: Why do Utopian societies require international investments? What qualifies as an international investment? What payment methods are used for international investments? How is the transfer of ownership of investments managed across society boundaries?

The chapter, Visas And International Travel, addresses key questions relevant to travel between Utopian societies. It explores: How can a citizen determine whether they can travel to a particular society? Will a passport be required? Is a visa necessary? Are there additional requirements for international travel? What rights and responsibilities does a traveler have in a foreign Utopian society? How does the airport process compare to present-day procedures? How does a traveler pay for goods and services in the visited society? What happens if a traveler loses their phone?

The chapter, Dual Citizenship, has two main objectives. First, it outlines the process of acquiring dual citizenship. Second, it clarifies dual citizenship by exploring the rights and responsibilities of dual citizens and their societies. Before a person can become a dual citizen, they must first be a citizen of a society. In this context, we will discuss birthright citizenship.

Additional Comments

In this book, the terms "society" and "country" are used interchangeably.

This book requires that society possess monetary sovereignty. Without monetary sovereignty, discussing ideal scenarios is not possible.

In the context of international topics, when we use the word "international", we are adopting a third-party perspective about interactions between two societies. When we use the word "foreign", we are one of the parties in an international interaction, and we are speaking of the other party as "foreign". In such a discussion, the word "foreign" holds a neutral meaning; there is nothing good or bad implied by the word "foreign".

We will use the word "dollar" to indicate the unit of currency within a society. Across society boundaries, these local dollars would be different and can have different names. When we need to distinguish between them, we will refer to them as society-A dollars, society-B dollars, and so on.

The goal of this book is to answer the question: How can we implement the ideas mentioned in Building Utopia? In describing "how", we will address the "what" and "why" aspects of the Utopian Financial Infrastructure.

The "whats" refer to various ideas, concepts, and systems that are part of the Utopian Financial Infrastructure. We will outline each one of them. The current financial system consists of interconnected ideas, concepts, and systems. The Utopian Financial Infrastructure will have use for many of the existing concepts, will introduce new concepts, and will discard some existing ideas and practices.

The "whys" are the justifications for each "what". Justifications are important because, without them, some of the "whats" might seem arbitrary. Justifications are important tools for comparing thematic and logical consistency among ideas, concepts, systems, and proposals. Writing down the justifications helps reveal flaws in reasoning. Once identified, they can be addressed, which may lead to changes in the "whats". Documenting justifications ensures that they are preserved and not overlooked.

The "hows" are the implementation components discussed at a conceptual level. In other words, "hows" are explored at a high level.

A society creates and maintains its financial infrastructure. Thus, the "where" aspect is answered as "in society".

When can this happen? When the majority agrees that it benefits our common good.

The Utopian Financial Infrastructure is a vast subject. Writing about it requires significant effort and time. Waiting for the entire book to be completely finished before publishing is not as important as conveying the ideas that have been written. Therefore, this book will be released in multiple versions.

The version number of this book will be visible in the e-Book and paperback. It is also noted on my website.

If an aspect is not fully discussed in this version, we will indicate that a future version of this book will explore the subject.

All essential elements have been included in this version. Is it possible that something important has been overlooked? Unlikely, but possible. Sharing these ideas may uncover overlooked aspects. Once identified, we can take steps to resolve them.

The design and implementation of the Utopian Financial Infrastructure will require contributions from many individuals. This book serves as a starting point for discussion.