By Gary Adkins – President, American Numismatic Association (ANA) ……
[Originally delivered at the Second United States Mint Forum on October 17, 2017. —CoinWeek]
Thank you Director Motl and your generous staff for inviting me to speak at your annual United States Mint Forum. It is a privilege to be here with you and enjoy the beautiful fall in Washington.
As I thought about the focus of my talk today, It made me a bit anxious. The nature of what I want to say may be sensitive to some attendees, but I believe if we want to be realistic in our approach, this needs to be discussed. I strongly believe that coin collecting and manufacturing are at a crossroads where the coming years may have a tremendous impact depending on how we react. In full disclosure, these of course are my opinions and interpretations and not those of the U.S. Mint. What I believe is ahead for the U.S. Mint and the American Numismatic Association affects our customers, suppliers and distributors.
Yes, the American Numismatic Association faces the same or similar challenges every day. We are both organizations at the forefront of rapidly changing times.
Those changes are being precipitated by technology, aging demographics and a rapidly evolving financial world. The world is changing in ways we have not yet imagined or prepared for. Technology is moving so very fast that this weeks’ advances are next weeks’ history. A recent study indicated that 90% of all the electronic data collected in the world has been collected in just the past 10 years. That is an amazing statistic! Some of the fastest growing companies are those that collect and analyze data. Artificial intelligence is another aspect of analyzing data by finding regularities in massive data sets that are too large or complex for the human mind.
This means we cannot move forward at an average pace and hope to keep up.
We must be progressive in the use of technology. We must be broadminded in our analysis of issues. Be creative in finding solutions, and work diligently with our strategic partners to insure our relevance in a rapidly changing world.
One aspect of that analysis is to consider our past, the very history that preceded us.
At the turn of the 20th century, philosopher George Santayana wrote, “Those who cannot remember the past are condemned to repeat it”. With our industry, however, repeating it can be exciting – especially considering the coin programs where the Mint has resurrected iconic coins of the past. That has been very successful, but that in and of itself holds minimal promise for the future of money.
Education will be the key component if we are to create a renaissance in coinage and a future for our industry and the collecting community. Teaching young people the historical importance of money in society, and its role in the arts, sciences, history and literature may be the key to promote moneys’ role and importance for current and future generations.
The first real test of money is our belief in its value, underwritten by the authority of a sovereign government.
As a way of emphasizing this and how technology is moving rapidly against us, I would like to briefly talk about “cryptocurrencies”. If you’re not sure you know what crypto-currencies are, have you heard of “Bitcoin” or “Ethereum”? These are monetary forms that exist in the cyber marketplace. They are essentially confidential forms of debits and credits on a mysterious balance sheet. By their very nature, they can be used to facilitate commerce in both good and evil ways.
There are estimates that more than 800 forms of cryptocurrencies exist in the cyber world. Compare that to the number of conventional currencies throughout the world, and cryptocurrencies are about five times larger! Most cryptocurrencies are essentially worthless and do not enjoy the fame or success of Bitcoin, now estimated to have an aggregate value of nearly $5 billion. Because of their technological and cyber appeal, they are being embraced by younger generations and pose a threat to money as we conventionally understand and use it.
Bitcoin uses what is called “blockchain” technology that decentralizes, self-verifies, and provides an anonymous and reliable register of every debit and credit transacted in its system.
Some proponents say that cryptocurrencies are the biggest thing to happen in the history of the financial world since the discovery of gold and its use as a monetary form.
I don’t understand the phenomenon of cryptocurrency. I suspect that most of us here don’t. Most of us use things every day and don’t understand how they work.
We don’t know how an electric motor works, or how a microwave heats things up, but we certainly know how to use them.
Most people don’t understand how gold operates as a world commodity or store of value either. You simply have a yellow metal disc or bar that someone will exchange with you for dollars (or pounds, or euros) based on some seemingly arbitrary value.
We think of money as being the stuff in our wallets and purses, but most money is not that. It is not all notes and coins. Ten years ago, the total amount of money in the world in terms of value was $473 trillion. That is a number so big, it is hard to get your head around. Of that number, less than 10%–about $46 trillion–was cash in the form of banknotes and coins!
What money really is instead is entries on your bank balance that represent electronic records of debits and credits every time we get paid or spend money. All these transactions head to different parts of a financial system, all of them nothing more than movement between and among various ledgers and registers.
So, let’s briefly examine the economy’s role in the future of money. Generally speaking, the cost of living continues to rise while wages continue to lag for most Americans. Over the past eight years, the Federal Reserve has added something like $3.5 trillion to the money supply. This extra money was supposed to light a fire under the economy. While this was somewhat successful, it also discouraged savings and increased household debt because of low interest rates. 25 years ago, the personal savings rate was around 10%; today it is only around 3.5% according to the Bureau of Labor Statistics.
Think about that. Over the next 10 years, millions of Americans are set to retire with little or no savings. That also means that disposable income will be dramatically affected in our primary demographic.
By now, you may be wondering what all this has to do with the future of money, the U.S. Mints’ role and why the American Numismatic Association is so interested in the aforementioned issues? What do all these technology advances, cyber currencies and aging demographics have to do with engaging a younger generation to step up and support the collecting legacy that was nurtured by their fathers and grandfathers? It is all about the money, as I said earlier, and teaching our youth, at both primary and secondary levels, the importance of understanding the history and evolution of money, what money really is, how it is used in commerce, and how it contributed to the rise or fall of societies and governments.
Money is merely an afterthought in today’s world. Paper currency and coinage play a minor role in daily transactions. If you want to pay for something, there’s an app for that.
Electronic transactions are a touch screen or scanner away. Most people carry little or no cash at all, for there is little need for it! If you offer up a $10 bill and a young cashier tries to make change for your $3.57 purchase, look at the terror on their face as they try to make change without having the cash register tell them the exact amount they owe you. Most don’t understand the simple mathematical calculation of counting change, for they have little exposure to it.
Most young people use apps or debit and credit cards to pay. Credit is abundant. Many of them have no clue how to write a check, let alone use paper money and coins. Their paychecks are direct deposited and bill payments are withdrawn automatically. Electronic payments rule.
So let’s talk about Education. Specifically education about money, its history, its evolution, its place in the age of technology and cryptocurrencies.
More importantly, let’s talk about moneys’ survival or obsolescence. If you walked out on the street and asked most people, they would probably bet on obsolescence! This is why Education is so important.
The elimination of the one-cent piece or “penny” has been discussed for many years. That discussion becomes mute in the fast-paced world of finance. The future of all forms of coin and currency seems destined for museums and history books as we become more accustomed to the age of technology.
Are these relics of money worth saving? We in this room would say emphatically YES! We rely on their use in commerce and collecting and would resist attempts to delete them. We must continue this discussion in a broader sense, but make no mistake: coinage and currency, and money systems as traditionally understood, seem to be in jeopardy.
So what are the solutions?
It is complex. We might need to rely on artificial intelligence to help us figure this one out? I believe that things like Bitcoin have come so far because it is the purest form of barter. This is especially true in the poorest of nations, where barter systems still exist. Barter, in its modern form like Bitcoin, is a method of credits and debits that sustain their very fragile existence.
There are seven billion people in the world today, and an equal number of mobile phone subscriptions! It is estimated that 2.5 billion people don’t have access to bank accounts but have access to cell phones. That means Bitcoin or some hybrid of it has a place in a world of cyber banking, where coins and currency are virtually nonexistent.
If the United States and other countries are to continue to flourish, understanding money, its history and its future, rests with educating its citizens.
Perhaps the only way to really compete with crypto- or cyber-currencies is to create value in our everyday coinage by minting them in gold and silver again. That is a very different and complex discussion, but certainly provides food for thought. If we look back to history, the most relevant societies and economies relied on the perceived intrinsic value of their precious metal coins. Only when those were debased did their economies falter.
Today, silver and gold coinage still rule as a respected tangible asset in many retirement accounts and investment portfolios. Their historical significance cannot be over stated. Money with intrinsic value cannot be dismissed and would certainly sustain a rebirth of coinage relevance in an age of cryptocurrencies and fiat money. Without some sense of perceived value, I fear that our coinage and currency may not be sustainable.
At the American Numismatic Association, the study of money and its origins and usage has been the focus for 125 years. Our mandate is Education. Our mission is to serve numismatics through the study and preservation of money.
We are determined to preserve and present the history of money in all forms throughout its long existence. In Colorado Springs, we have a phenomenal museum and library that serves our membership. A current exhibit details money and its role in World War I. It outlines how monetary systems shaped the destiny and outcome of the war, and how they changed, along with the maps when the war ended.
Coinage and currency have certainly played a major role in this country’s history. They have revealed the trials and tribulations of our country as it struggled and grew. We have come a long way, and coins and currency tell that story.
The American Numismatic Association strives to tell these stories and share our history.
As part of our educational mission, we have developed several programs to reach young people. Among the most prominent are “Coins in the Classroom”, a professional development course for educators which promotes numismatics in classroom settings, using history, science, language, art, technology, geography, mathematics and economics. Another program is “Coins for A’s” which rewards students who receive three or more As on their report card. We also have a scholarship fund that helps young people involved in numismatics. In the coming months, the ANA intends to introduce numismatic education on our website through a series of lectures and courses. ANA currently holds two week, in-depth seminars during the summer in Colorado Springs.
This is only a sampling of the programs available through the American Numismatic Association. You can find more information on our website, money.org. Our next big endeavor will be to reach out to universities throughout the country to foster awareness, and hopefully build college curricula to support numismatics and the study of money as an important part of a balanced education.
We must work together to educate our young people to the importance and necessity of a strong and robust monetary system. The role of money cannot be overemphasized. It plays an important part in understanding history, the arts, the sciences, geography and literature, and brings us a more vivid and enjoyable view of the world we live in. I encourage all of you to work with the United States Mint and the American Numismatic Association through honest discussion, innovative idea sharing and collaboration in forum’s such as this, where we can shape and preserve the Future of our Industry and the collecting hobby.
Thank you for this opportunity and your attention today.
United States Mint Headquarters, Washington, D.C.