The Future of Money: Todd Hirsch at TEDxEdmonton

I always think it's a good idea to start a presentation with a really wise quotation you might know this I work all night I work all day to pay the bills I have to pay aim it's sad and still there never seems to be a single penny left for me that's too bad in my dreams I have a plan if I found me a wealthy man I wouldn't have to work at all I'd fool around and have a ball the immortal words of ABBA and their 1977 hit money money money my topic this afternoon is the future of money and maybe it's appropriately asked an economist to talk about the future of money and when it was first approached to talk about it I was very very energized by it because they thought wow there's a lot of different things that you can you can talk about and then they almost started to become a bit overwhelmed by it because in fact there were too many facets to money in different directions you could take it so I really had to narrow it down to just three themes that I want to touch on this afternoon when we talk about the future of money and where it's going the first thing I want to talk about is the physicality of money the actual physical presence of money no you remember Scrooge McDuck he had so much money he could actually make up he'll load of it and ski down a hill of money he was one rich duck he could roll around in a vault of money you know there was always this aspect of money being something you could hold something he could touch and in fact for most of us who grew up in the 20th century that you know physical aspect of money was very real to us and when we look at ancient forms of money the types of currencies that they would have used seashells at certain points in history served as money playing cards served as money even in prison systems cigarettes often formed a crude sort of medium of exchange a kind of money but there was always a physical element to it you could you could take it and you could stick it away and when it came time to actually purchase something you had to physically hand something over now in more contemporary times economists refer to our money system we have what we call fiat money in other words the money itself doesn't have any intrinsic value it's only valuable because in fact some central authority says that it's valuable and as a culture and as a convention we have we we all agree that if I give you this ten dollar bill that it's worth ten dollars in exchange for something else fiat currencies you think about some of the fiat currencies that have come and gone in recent years here in canada you remember the canadian two-dollar bill of course now replaced with the tunis the two dollar bill was often issued by the morally upright because of its connotations with prostitution and other unseemly activities we also had something called the thousand dollar bill I never really saw one of these but it did circulate I don't know how many of you saw these I was mostly used by the way--by drug dealers and money launderers so they sort of thought maybe it's a good idea to get rid of that back in the 30s there was something called the twenty five dollar bill and in the 50s there was an unusual situation there was an illustration of the Queen on one of the bills and she had this devil in her hair just kind of the way the harriday was drawn so you can see the the grotesque kind of feature of leering out from behind the Queen's back of her head apparently the Queen wasn't amused so we had to redraw this bill and get rid of that and of course the most reason to go by the wayside of the little Canadian penny may it rest in peace it's time had come and gone ended up costing the Canadian Mint more than a penny in fact than it was a worth so it's time had come let's take take a moment and and grieve the loss of the penny okay that's long you know our current bills up the plastic bills are actually polymer bills at the Bank of Canada introduced there are of course much more durable than the paper cotton sort of blend bills before you could throw a $20 bill in your jeans in the washing machine and it'll come out a okay animated polar mate makes it much more difficult for counterfeiters to replicate and that along with all of the other anti-counterfeit features of the bill vary discouraging for for counterfeiters side things that the Bank of Canada is built into the bills to make it difficult to replicate but increasingly our money isn't physical at all as we know it's much much more these bits and bytes zipping up and down fiber optic cables were much more comfortable with electronic purchases and in fact only four percent of the money supply in Canada is actually those physical polymer bills and coins the other ninety six percent of money is really just electronic blips on mainframes of banks and financial institutions it just kind of exists virtually it's really kind of electronic money and of course the payment systems that we are used to be I used to make now is with debit cards and we buy things routinely online with credit cards we even use our phone to pay for things in fact just last night I was learning about a company called square with a little square device you pop in the top of your phone and guess you just wave your phone at things and you can buy things so it's all very much electronic purchases and I think in the future this is decidedly where things are headed I think as Canadians become more comfortable with the technology and as the technology and the apps and and things like square is this all advances I think Canadians will embrace this and we will lose some of the physical aspect of money I don't think physical currency is going away all together but I do think in the future we will be using much more electronic forms of money so that's one aspect later when I talk about it's sort of the physical presence of money the other that I want to talk about is who's issuing the currency I want to talk about central bank's for a moment such as the Bank of Canada the US Federal Reserve the Bank of Japan the European Central Bank these big central banks around the world these are the the monetary authorities of our system and they're responsible for issuing currency trying to maintain its value and and keep inflation low and these monitor these financial central banks they become enormous ly powerful and enormous ly influential in the economy even in the last ten years they've almost risen to celebrity status you think about our outgoing governor of the Bank at a Mark Carney is always called a rock star central banker well 20 years ago that would have made no sense at all I mean 20 or 30 years ago I don't think most Canadians could have named who was the governor of the Bank of Canada but now these guys are celebrities and you can hardly imagine a meeting of world political leaders or finance yours without central bankers being at the party they're always sort of in there very powerful very influential in monetary policy but they're also very controversial and I think they will become more controversial in the future and that is because if you think about the power and the influence that a central bank has these guys are unelected officials they're not really accountable to voters at all they really only report to the finance minister who could fire the governor of the Bank of Canada but there is increasing concern that leaders within these central banks the US Federal Reserve the Bank of Canada that they're not accountable to voters if Canadians aren't happy with where monetary policy is going if they're not happy with interest rates they really have nothing they can do about it they can't wait till the next election cycle and and vote them out there is one currency that is contesting the authority of central banks a little bit and that's this you've probably heard a Bitcoin some of you might use Bitcoin but I think it's fair to say bitcoin is not really very well understood yet it's one of these what they call crypto currencies it exists only online and bitcoins not the only one there are others but Bitcoin has really gained a lot of popularity maybe a lot of notoriety lately it exists only online you can actually go to websites you can use Canadian dollars or US dollars you can purchase bitcoins and you can keep your bitcoins any electronic bank account and you can use it to buy goods and services online but what's almost the most interesting about Bitcoin is not the fact that it only exists electronically the most interesting thing about Bitcoin is that there is no central authority behind Bitcoin there's no central bank that is controlling it and raising interest rates and you know engaging in quantitative easing Bitcoin was set up as a computer program by an individual several years ago who by the way is now completely backed away from Bitcoin he doesn't want anything to do with he's kind of banished but Bitcoin still exists out there in on online in cyberspace and if you're skilled at these kinds of things if you can write computer code you can actually go in mine Bitcoin you can actually get bitcoins but it takes it's quite a manual process there's a set number of them 21 billion that will ever be in circulation online but there is no central bank behind this now there's a lot of appeal to Bitcoin especially by market libertarians you know those who are sort of naturally suspicious of governments and tax collectors especially and they don't like the idea of central banks they like this whole idea that Bitcoin perhaps it's the Wild West of currencies that they can conduct all their economic and financial affairs outside of the eyes of those nosey government's you know and those tax collectors this is really appealing to them and also the drug dealers and money launderers you know those people too but there is I think limits to how far bitcoin is going to go I actually don't think bitcoin will become a dominant global currency I don't think it's going to supplant any US or global central banks the reason for that is the very fact that government isn't involved in Bitcoin and in fat governments now are wanting to have a little bit of a closer look at Bitcoin users it's not illegal to use Bitcoin it's perfectly legitimate you can use anything really as money you could use chickens as money as long as you're pretty confident that the buyer and seller will accept them Bitcoin it's perfectly legal to use but if you use it governments are expecting you to be compliant with regulatory procedures and you have to report income that you're earning in Bitcoin like this all has to be aboveboard and lately the FBI has been cracking down on Bitcoin and other cryptocurrencies users there's been some arrests and other places in the world as well and at a recent conference of Bitcoin convention of Bitcoin users in San Jose California a few weeks ago in fact the number one topic at the conference was regulatory compliance in other words the the legitimate users of Bitcoin they understand that if Bitcoin is to go anywhere it has to be aboveboard this has to comply with with financial regulations well this takes all the fun out of it for the market libertarians and the drug dealers by even then the very reason they like it is the fact that perhaps it offered this chance to do things outside the view of government but if everything has to be compliant with regulations which indeed it will have to I think that it will take away some of the sort of that appeal or some of the attraction that they were going to for for Bitcoin in the first place so that said I don't think Bitcoin is going away I think it will continue to exist it might even increase in popularity and people will use it to purchase things online but I don't think it will become in fact a dominant global currency I think central banks will in fact become even more powerful and influential in the future however I do think that will come with some pushback and some controversy I think over the next decade some of the biggest policy conflicts we have in discussions we have is around the role of central banks finally the last aspect that I want to talk about money and maybe for me anyway it was maybe the most interesting is the future of how we think about money our relationship with money as individuals maybe some of our emotions around money now traditionally money and and issues around investing money these have been very very left brain processes you know what's my rate of return on this investment or should it go stocks or bonds how do i divert if I my portfolio you know show me part charts all of these things this is all very left brain thinking very analytical very sort of linear thought process but there has been a shift in our generation and how people are starting to think about money more and more they're wanting to use their right brain they're not only asking you know what's the rate of return we're still interested in that but not just that but they're asking questions like what do I even want money for in the first place what can I do with this money to maybe improve my life or improve the life of my family where do I want to be in 30 years you know all those kinds of aspirational questions questions really around storytelling they require some imagination the possibilities can they make the world a better place with my money people are connecting with those questions more and more and that's much more right brain I think that will continue and I think that's actually a really positive really hopeful way we're moving because in fact if we think about money with not just our left brain but with our right brain we will become much more whole brain thinkers around money when you think about it money is a very intimate very private question let's think about that for just a minute how intimate that question is how much money do you make you have to be several dates into a monogamous relationship between before that question kind of comes up and I would not recommend any of you go out at the coffee break and turn to the person next to you and ask how much money do you make you know it's a very rude question in our society in our culture and when I was thinking about this I started to puzzle why is why are we so private about money you know you just as soon ask somebody about their religious beliefs or maybe even their sexual practices before you would ask them about how much money they have or how much money they make you know what's your tea for he just would not ask someone that question and it's very private very intimate and I was sort of puzzling her struggling a little bit why as canadians are we so private with with issues around money in and income is it because maybe we're a bit embarrassed almost it seems the more money we make the more private in fact we want to be about how much money we have is it maybe we're a little bit fearful in fact of what might happen if I know how much money you make and you know how much I make might we start ranking each other and maybe changing our thoughts and our feelings about individuals this seems very uncondition about how much money you all make might I fall into that temptation to start you know ranking people and judging them and we don't like the idea of doing that so maybe we hold these cards very closely and we're very private and intimate with our money I think in the future that trend will continue especially as we start to use our right brain more around money issues it becomes automatically a more personal issue if we're aspiring to do things with their money and the more personal it becomes I think it will increasingly become more private and more intimate and I think it's a question that we should each sort of stop and examine in ourselves power or part money has always equated to power and influence you think back over over time maybe even a hundred years ago you think about the u.s. industrialists the multi-millionaire the the JP Morgan's and the Carnegie's and the Rockefellers these were the families of power and influence they were nation builders and they were highly admired they were also philanthropists people regarded them very highly they aspired to want to be the Rockefellers power and influence always equated money now in 2013 I think it's still we still have the uber-rich among us who are very powerful very influential you think about Oprah Winfrey or Bill Gates or jay-z all of these individuals enormous ly influential and it's because they've amassed a lot of money but increasingly I think that in our culture and in our world that it's not as necessary to be super rich to have power and influence and to be admired if you think about leaders like Nelson Mandela do you think about even an individual like Terry Fox he wasn't a rich guy but he changed he transformed a generation of Canadians through very inspirational acts it was courage and his and its commitments and passion he wouldn't have seen the Terry Fox story a hundred years ago but in 1980 you did you know even in 1980 you didn't really see a whole lot of them maybe that's why it was such a remarkable story he was a pioneer and in 2013 we're seeing more stories like this now don't get me wrong I'm not saying greed is going away certainly it won't and people will always lust after money but I think the people who lust only after money increasingly will not be the most influential in our society it will be those who are rich in other ways in creativity and passion and commitment and courage finally I want to relate all of that to a story a parable actually about a farmer who farmed his land with his four adult sons for years and over the years the sons started to fight and argue as families often do it was about money and about how the farm should be managed and the fighting had become so bitter that in fact the sons weren't even talking to each other their relationships had completely broken down and the saddened the father very much and and on the father's deathbed he gathered his sons around him and he said sons are something you need to know he said there is treasure buried in the field and after the father passed away the the sons actually became quite energized at this thought and they actually started to come together as a team they realized that they could find this treasure more quickly as a team rather than as individuals and they had agreed that they would divide the treasure equally among the four of them so they divided the field the farm field in quadrants and they each started to dig and dig and dig looking for this treasure and they started to laugh and talk and dream about what they were each going to do with their share of the treasure and for days and days they dug and days turned into weeks and weeks turned into months and eventually they had turned up every inch of the farm and they found no treasure and they were quite despondent about this but the amazing thing was the following summer that field produced a record bumper crop it was because the land had finally been tilled it had been turned over which it hadn't been for years and all of a sudden the farm was once again productive and profitable the sons had indeed found their treasure they knew what their father was talking about it just came in a form that was maybe not expected but not only were they materially wealthy their relationships as brothers had been restored they were wealthy in that and they vowed his brothers that they would not fight and argue anymore that they would work together as a family as brothers on this once again profitable farm I love this line here some people are so poor all they have is money I think that sentiment rings true with a lot of us and that's a very right-brain sentence to understand of a totally left-brain person wouldn't really you know sort of get that and none of us by the way are totally left brained people I think in the future money will become less and less physical and more electronic I think in the future central banks might become even more influential and powerful but that will bring some controversy I think as individuals we will use our right brain even more when we think about money and I think the powerful and influential in the world won't necessarily just be rich in money but they'll be rich in creativity and courage and passion so to close I return to Abbas 1977 hit and the chorus money money money must be funny in a rich man's world money money money always sunny in a rich man's world aha aha all the things I could do if I had a little money it's a rich man's world you know with due respect to Sweden's pop superstars I think they got it wrong thank you very much [Applause] you

Channel: TEDx Talks

Views: 101,583

Rating: 4.3579454 out of 5

Keywords: tedx talks, ted, ted talks, tedx talk, tedx, ted talk, ted x

Id: K0n3BGId9nU

Length: 21min 13sec (1273 seconds)

Published: Wed Jul 17 2013

Reddit Comments

[u/spottedmarley]

Pretty good until he starts talking about bitcoin.. and says there will only ever be 21 Billion bitcoins... ? Fail. and Satoshi Nakamoto doesn't want anything to do with Bitcoin. (is this his guess? Fail) .. and Bitcoin will not be a dominant global currency. (definitely his guess) Fail. Then I turned it off.

[u/swmich73]

Quite frankly that was boring. The "future" that he is really talking about is how we think about money, what we want to spend it on. The Bitcoin shout-out was completely gratuitous.