Dr. Christopher Houghton Budd has created this abridged version of a description of what a solari is and what it can do for us. I thought it was particularly well done. Special thanks to Christopher. – Catherine Austin Fitts

==========================================================================

Nice... or Rough?

The Solari Idea

Catherine Austin Fitts

 

Well known as an investment banker experienced at using financial tools to solve problems, Catherine Austin Fitts has long experience in government and corporate finance. She has responded to the problems she has encountered with the idea of a new-style investment.

This (slightly abridged) item is taken from her website.

A solari is an investment databank and investment advisor for a place - a place being an area that is typically no larger than 10,000 people resident at the time of the solari’s creation.

A solari as investment databank promotes literacy about "how the money works" within its place and - with tools such as investment clubs - promotes higher rates of investment within its place.

A solari circulates annual reports on:

  • "neighborhood financial statements" describing public and government resources and management;
  • it’s estimate or poll of one or more indices of well being which support a common vision of intelligence; and
  • the equity value of the solari and any equity pools it manages.

A solari as investment advisor invests in local reengineering and investment transactions that improve equity rates of returns within its place that are profitable and attractive for the solari and its shareholders, including but not limited to:

  • Consumer aggregation;
  • Small business/farm aggregation;
  • Small business incubation, back office and marketing support;
  • Neighborhood venture funds and investment trusts or funds to access stock market equity for local business and real estate using the Solari A/B share model, community offerings and wider stock placements and offerings;
  • Debt-for-equity swaps on performing and defaulted government and private debt
  • Buyouts, reengineerings, renegotiation and waivers of government investment and regulation; and
  • Community currency and barter networks

Market forces determine the number of solaris in a place and their relative market share.

Two Share Types

A solari has two classes of common equity: Solari As and Bs. Solari A voting shareholders - the founders and their self-perpetuating successors - live within the solari’s place and govern the solari. Economic ownership is represented by Solari B non-voting shares, which can access local and global capital, directly or through vehicles managed by the solari. Solari A shareholders make their profits on Solari Bs just like everyone else.

The solari’s equity structure promotes governance by local leadership best qualified to create the highest local equity yields for the benefit of all shareholders - whether management, neighbor or global investor.

A solari’s A/B equity structure provides incentives to reengineer current local investment to significantly higher yields.

Transformation of local investment performance occurs in part by increasing alignment of interests where such alignment enhances equity yields – between various groups locally, between local and global investors, and between human, environmental and financial capital.

The United States was the location for prototyping the solari model and is the basis of describing it here. The solari concept has broad application globally, both in transforming industrialized nations to sustainable economies as well as supporting non-industrialized nations to optimize current resources and create new wealth. Indeed, in many places throughout the world, it is essential to ensure successful privatization and wealth creation in the face of efforts by the industrial nations and G-7 to deplete wealth to subsidize non-sustainable first world populations and lifestyles as well as to centralize political and financial power and resources.

Economic & Financial Literacy

The word "solari" is from the Latin word "sun" and was the name of the currency used in the science fiction series, "Dune."

By promoting literacy about "how the money works" and improvement in investment performance, a solari provides sunshine regarding place-based resource optimization and risks necessary to support wealth creation.

In the U.S. resources have traditionally been managed by two systems. The first is the democratic processes within a republic. Eligible US citizens vote at the polls every year or two to chose representatives who manage resources that are collected by taxing, allocated by distribution of government credit and subsidies and created and enforced through regulatory, legislative and judicial standards and decisions; and the second is the marketplace where consumers and organizations "vote" every day with the investment of time, attention, choice of what small business to start or employment to pursue, and how they use their money in terms of purchases, deposits and investments.

Whether the democratic process related to resource management within a republic or the market process in the economy, both systems require transparency to optimize individual and system-wide intelligence. Citizens require accessible information about "how the money works" to understand their political representatives’ and governmental organizations’ budgets and actions and hold their representatives and themselves accountable for actual performance. Likewise, consumers, entrepreneurs and workers need accessible and low cost information to optimize preferences and self-interest in the marketplace.

Without place-based transparency, government and market allocation of resources in the U.S. has become increasingly manipulated and sub-optimal in terms of economic performance. The deterioration of the rule of law has accelerated, with organized crime rising as a % of economic activity and capital investment. As this happens, total wealth and productivity shrinks from the optimal and concentrates into fewer hands. There is a shift from small business and farming to corporate control and production which is not merited by fundamental economics. Leadership is increasingly determined by performance in capital control and asset shifting rather than wealth creation. The citizenry has experienced deterioration in standards of individual and civic responsibility and accountability.

A decentralized system can only succeed if it is committed to the highest standards of traditional fiduciary performance and wealth creation. In short, in the age-old competition between the forces of centralization and the forces of decentralization, the model that produces the highest learning metabolism and performance in terms of both individual and shared wealth creation has the best chance to win.

Reengineering Yields on all Capital Within a Place

As US national leadership bolstered by NAFTA continues to move - even expropriate - significant amounts of private and public capital and employment abroad and encourage low wage immigration, local U.S. leadership is faced with the challenge of:

  • How to replace small business, small farm, municipal and community financial capital with steadily increasing amounts of intellectual capital made possible by new technology and reengineering;
  • How to reengineer federal, state and local government investment in a place safely and effectively;
  • How to build local competitive advantages in a global marketplace for goods and services;
  • How to build local competitive advantages in accessing global capital;
  • How to integrate a much higher turnover of people with much greater diversity of education, culture and experience;
  • How to manage and reverse the growing dependency of the local economy on organized crime activities, the reinvestment of organized crime profits and accumulated "hot" capital; and
  • How to manage the risks of dependency on centralized systems, a war economy and related "wildcards."

In this environment, a solari can use the increased local transparency it creates to enhance equity yields locally.

To name a few:

  • A solari can help reengineer federal, state and local government investment within its place. Federal investment in the US currently has negative rates of return to taxpayers and state and local rates of returns are low and headed in the wrong direction.
  • A solari can help local small businesses, farms and local public functions reengineer to take advantage of opportunities created by new technology and reengineer to sustain competitive competencies during the shift to a global economy.
  • A solari can help local small businesses, farms and local public functions (water, energy, sewer) convert to equity-based systems that create the incentive systems necessary to create much higher reengineering and learning speeds organized around performance.
  • A solari can use non voting Solari B shares to engineer debt-for-equity swaps, particularly for high yield or publicly and privately held defaulted municipal, small business, mortgage and consumer debt.

Summary

The speed at which US citizens reengineer their "shared intelligence" and learning speeds locally will determine the extent to which the US is able to avoid the economic dilution and/or demodernization and depopulation experienced by Russia, Argentina and other areas of the world that have experienced an implosion of the rule of law8 and the resulting "continuous consolidation of money and power into higher, tighter and ‘righter’ hands."

As Tina Turner once sang, "We can do this nice – or rough."

An entrepreneurial way to say ‘nice’ is that a network of solaris is the infrastructure needed to exploit the reengineering opportunity to transform the United States to a sustainable economy. Privatization, globalization, securitization, and digital technology -these are trains that have left the station. If we rethink traditional alignments and reinvent how we support our resource governance on a decentralized basis we can engage traditional market forces and fiduciary principles to create substantial new wealth around optimal care of the land, of each other and of ourselves.


A solari is the "compass" that makes it possible for freedom, accountability and wealth creation to reinvigorate each other.

 

Return to Solari Learning      Return to Solari Home Page