PediaWorld

As we move slowly into 2008, what are our thoughts? How is the year going to turn out? How successful will we be and what will happen to our businesses? The businesses we either own or manage. Looking back on the past few years with the changes from 9/11 onwards many have failed to see the subtle shifts in many industries and unsubtle shifts in others. The Airline industry, for instance, is in a subtle shift. From large airplanes to smaller Biz Jets, to even larger airplanes, and the largest carriers filing for Chapter 11. How is it going to pan out in 2008?

One thing that most of us fail to see is that while there are trends, (economists would not exist if there were not) there are also dramatic changes. Changes that catch us unaware. One change could however trigger a flood of new ideas and then we would have a trend, once again. Perhaps video iPods are an unsubtle shift for the advertising industry. The way we watch TV and adverts is about to change. We can select shows to down load and we can use TiVo skip ads.

Now we as managers would want to be watching out for radical departures from the norm. As a manager and leader, as a great leader, we need to anticipate changes, good and bad and be in place to work with them. Just as a surfer positions for a great wave. It is all about positioning and timing, as well as watching the trend but expecting the unexpected. The rogue wave with a right break, which just appears.

Unfortunately too many managers focus on reaction mode. Problem solving, reacting and appearing to be the hero. Mostly managers do this because they are judged by what they solved not what they avoided or created! In this mode businesses maintain but hardly ever outperform previous years results. It is all an act. The big picture is not understood and small fires become large by design.

Now if we were able to anticipate better we would be more able to avoid the fires all together. This anticipation would lead to managers allowing the strategies to be executed. Good anticipation comes from strategic exploration.

The road to exploration can be step by step (reductionistic) or holistic (a systems approach). It is a little of an art and a science. So this means practice, persistence and patience are required to develop your ability. As you improve your ability it will increase at an increasing rate and you will -see- the future changes. Powerful stuff!

So in order to be more anticipatory managers need to read widely, books, newspapers and journals but these days this includes many eZines, Blogs and even podcasts. There are many influential thinkers giving their ideas on how the world is changing.

So what are we looking for? We are looking for the signs of change. Just like we cannot see wind but we can see leaves move. We can judge direction and speed by seeing the shadows of clouds moving or ripples across the water. We need to find the indicators of change.

An example of predicting change and preparing. A large American cosmetic manufacturer read in a scientific journal, an article for a new simplified approach for making a colloidal gel. So they knew that there was a change coming in the base materials they used. Who was going to take this scientific discovery and bring it to their industry and how was it going to impact their industry? Would they be first? They needed to figure out where the leaves were moving to find an indication that this new method had been applied.

Nine months later a very small article in a local newspaper happened to mention a French cosmetic company had found a way of substantially reducing costs. Now this was not the Wall Street Journal or New York Times. Merely some small town paper that had picked up the story as a filler. Amazing that it was picked up by the cosmetic company? Luck or design?

The US manufacturer now had something to go on. The leaves had moved. It took a few months to uncover the company and discover that the new process substantially altered the landscape, such that they would no longer be profitable using the old processes. They had to negotiate a license or create their own new process in a hurry.

No amount of re engineering, TQM, consulting or application of IT systems would have made this company, and in fact the whole industry, competitive. Their world had changed. As Joel Barker would have said their paradigm shifted. It shifted them back to zero. They saw this and acted before they lost their industry to a new technology.

What advance is going to occur in your industry that would set you back to being a wanna be? How would you know if a competitor had developed this technology? What leaves are you watching? It may be closer than you think.

When people talk to me about their financial problems, there is one thing they always mention to me that they feel is a great stumbling block that has been place in front of them, keeping them from getting down the path to success.

“The price of gas is killing me,” they say. “We got to do something about the evil oil companies ripping off the hard working people.” I’ve heard it so many times I’ve got it memorized perfectly.

Let’s take a close look and see just how badly we’re all getting burnt by the high price of gasoline.

The price of gas is way too high!

The price of gas is high and that has an effect on everything. High gasoline prices cause high shipping prices and this price is passed on to the consumer via higher prices of goods. It’s easy to see if the price of gasoline goes up too much it could cause a substantial economic downturn.

However, right now the inflation rate is a very healthy 2.2%. If high gasoline prices were causing problems, inflation would be high. In other words, if energy prices were at destructive levels, they would be causing a recession. There is no economic downturn right now. Interest rates and the unemployment rate are good. The G.D.P is strong and steady.

Yeah, but I wish prices were like they were in the 50′s!

When adjusted for inflation, the price of gas is about the same, or a little lower than it was in 1980. In the 50′s and 60′s, there were periods of time when the price of gas, in inflation adjusted terms, was higher than it is today.

So, it would probably be inaccurate if you were blaming gas prices for your financial woes, unless you have some very unusual circumstances. Probably $4.00 per gallon gas, for a prolonged period of time, would harm our economy, but the $3.60 that we have experienced for a couple of short bursts, and the $3.00 plus or minus we are paying now, seem to have no negative effect.

Aside from the inflation adjustment analysis, economists believe that the tax cuts that were passed in George W. Bush’s first term have negated the effect of rising energy prices. Economists also agree that raising the income taxes back to where they were before they were cut would slow down our economic growth, and then if the price of gas went up again, it really could cause a recession.

In conclusion, I’d have to say we probably could do better, but as of yet, the high price of gas hasn’t slowed down our economy to any measurable degree.

The big oil companies only care about profits!

The worst thing the high price of energy has done to this point is cause strong hostility toward our nations’ oil companies. This is very much a problem! American oil companies are not evil. Their profit margins are actually smaller than many other businesses’ profit margins.

Across the sea, in any of the several countries who would love to see America fall, they love it when we hate our own companies. They would love to see us repulsed by all of our industry. After all, we have set the standard in the world for capitalistic excellence. That is why they hate us. They are jealous of us. We have everything so they want to see us become poor, miserable, hateful, vengeful, useless slobs just like they are. It truly encourages them when we hate our own leading companies.

Could you imagine the shape we would be in without our oil companies. Which industry would survive without them? Blacksmithing? The Great Depression wouldn’t come close to an example of the way we would be suffering without our nations leading companies being able to survive. The thought of this would make a terrorist’s blow himself up with a smile on his face!

Whatever? Still, the price of gasoline is way too high!

Keep this in mind. Right now New York Unleaded Gasoline is trading for $2.03 a gallon on the New York Mercantile Exchange. You can buy it for that. Of course, you would have to take delivery on 42,000 gallons, but that is what the price is, $2.03. The rest of the price of a gallon of gas that you pay at the pump includes, $.08 a gallon to the gas station and taxes. The gas itself is $2.03.

I just came from the grocery store. I bought, among other things, some bottled water. The container it came in looks like it is a gallon container, but actually, the container size is 3 quarts, 5.4 ounces. This container of water cost me, before taxes, $1.29. By doing a little calculating I found that $1.29 for 3 quarts 5.4 ounces is equal to $1.63 for a gallon.

Now, that’s water! Water is cheaper than gas. Now go find something else.

Purchasing car insurance for the first time can be stressful. Thus, most people just accept what the dealership or car loan lender offers and don’t bother to shop around for the best car insurance offer available. What these people fail to understand is that a small difference on the monthly payments of an insurance premium can result on huge savings. Furthermore, if the payment of the premium is not done in installments savings can be even higher.

When purchasing your first car, the insurance may not be your priority, but though that may be understandable, you still should worry about it a bit. Remember that the cost of insurance is not the only issue. Proper coverage will protect not only your recently acquired vehicle but also yourself and third parties from damages and liability. Therefore, giving some thoughts to your first car insurance is definitely a good idea.

Why Car Insurance?

Some wonder why they need car insurance and even consider the possibility (such consults are received) of not buying it. What you need to understand is that the situation is not that simple at all. The department of motor vehicle requires you to have insurance both to protect yourself and to protect others too. In case you cause damage of property or injuries to third parties, you will be held responsible but the insurance will pay for it. That way the law makes sure that even those who wouldn’t be able to afford the proper reparations otherwise, do.

Since car insurance is required by law, non compliance carries severe punishments. There are simple fines if you are required by authorities to show proof of insurance and you can’t comply but for repeated offences or if you are involved in an accident without having car insurance you can lose your license and won’t be able to drive for a long time.

Getting Affordable Car Insurance On Your First Car

Even though that you may be a first time car buyer, that doesn’t mean that you need to pay an expensive car insurance product. Though you will have to purchase more expensive car insurance than those that have been driving for many years now (without participating in many accidents), you can still get good terms on your first car insurance policy if you are careful enough.

First of all, you need to research the different car insurance products available to you and decide what kind of coverage you need according to your vehicle and the use that you will give to it. Secondly, you will have to request different quotes from insurance companies providing them that information. Insurance companies are everywhere: you will find advertisements on TV, magazines, and on the internet. Each insurance company has an online website and there are other sites offering insurance comparatives. Make sure to request several quotes before starting your own comparison.

Get familiar with car insurance discounts and see which ones you are eligible for. That way you will be able to reduce your insurance premium to a more affordable state. Some insurance companies rank their clients according to how many accidents they have, whether they have an inside parking space, etc. Therefore, if you think that you will be able to benefit from those clauses in the future, it might be wise to purchase that type of car insurances.

Recently, there have been reports on the radio and in the local newspapers on numbers that have come in on the average annual household income. The report states the average annual household income has fallen over a five-year period between the years 2000 and 2005. In 2000, the average annual household income was $55,714. In 2005, it is reported to have dropped to $55,238.

This, of course, has to be seen as bad news for the economy. What does it mean to our economic future, and what will happen if this number slips even further in the coming years?

What does the average annual household income indicate?

The average annual household income is one measurement used by economists to measure one of the functions of our economy. Namely it indicates the direction in which income is going. However, this measurement can be undependable, not always giving a clear picture of whether income is rising or falling.

Here’s how. In the year 2000, the average household consisted of 2.62 persons. In 2005, the average household was made up of 2.57 persons. $55,238 divided by 2.57 is more than $55,714 divided by 2.62. So, even though household incomes drifted downward, each person’s worth edged upward.

Two important measurements; GDP and GDP per capita.

The GDP is a measurement of the total size of an economy. It is the value of all the goods and services produced within a country’s economy. Economists like to use the measurement known as GDP to get an idea of the financial worth of a nation.

GDP per capita is a measurement of the wealth of each individual of a particular country. GDP per capita is simply the total GDP of a country, divided by the population of that country.

In the United States, the GDP per capita in 2000 was $34,759. In 2005, it was $37,532. GDP per capita tells a story different from the one being told to us by average annual household income.

How can this be?

Take the example of a family of four earning $60,000 per year. One of the family members moves out. This person who moves out doesn’t become a full-time employee until that time. Previously, he was in school, earning little or no money. So, after he moves out, he gets a job where he makes $30,000 per year.

Now if we take the average annual household income of these two families, the first being the family, now consisting of three people earning $60,000 and the second, the family of one, the young man who moved out and now earns $30,000 annually, we find when we average the household incomes of these two households, the average annual household income has fallen by $15,000. $60,000 divided by one household is $60,000 but $90,000 divided by two households equals $45,000.

The GDP per capita, on the other hand, has grown. The GDP per capita is now $90,000, divided by four persons, where it previously was $60,000, divided by four persons. So, another income earner in the economy is reflected in the GDP per capita, but the term average annual household income clouds this fact because even though another $30,000 is being earned by the population, an under average income family has been created.

By looking at the two different measurements of wealth of a country’s earnings, you can get very contrasting ideas and come to differing ideas about its economy. This is why economists like to take a look at more than one indicator when they are trying to take a snapshot of an economy.

So then, a recession is not right around the corner?

The U.S. economy is strong and growing. All the main numbers of this economy have looked very good in recent years. They continue to look very good today. Unfortunately, all of today’s press are not well versed in economic matters. Also, the same can be said for many people consuming the news. This means that reporters can easily mislead the public whether it be on purpose, or not.

Do I think some misleading is done on purpose? Unfortunately, yes I do. A large percentage of the press today appear to have a bias against the current administration, and furthermore, they seem to not be above accentuating the negative every chance they get. Knowing people vote with their pocketbooks and wallets, many in the mainstream media, who clearly have a liberal leaning, seem to be doing everything they can to disparage the very strong economy we’ve enjoyed over the past several years.

Unlike other trading exchanges such as the NYSE, NASDAQ, and other major stock trading organizations, trading in the foreign exchange market can be extremely volatile on a day-to-day basis. It is crucial that anyone who is going to invest in the Forex market be as informed as possible on the global economic news of the day that influences the market. There are numerous economic factors that influence the movement of a particular currency.

When you are considering investing in the foreign exchange market there are many economic indicators and factors that governments, as well as privately owned companies provide that can give an inside look at possible economic performance. When countries issue economic reports they not only show the country’s particular policies and current events but also reveal the economic health of the country.

Many times a responsible and reputable broker can be a good source of economic news and give good advice on what particular trades may be good at a particular time. If you don’t have the time to stay up on the most current reports, a good broker can be crucial to your Forex trading success by studying these reports and determining whether a particular country is in an economic decline or enjoying a major increase. The great thing about Forex is that you can make money either way.

News that is necessary for the Forex trader is of much greater detail than the typical investor is interested in or even cares to follow. When you are considering investing in a particular country’s currency, a few of the main factors to look at include current events and the state of the economy in that given nation. Statistics such as housing, unemployment, inflation, budget deficits, and current political climate can all affect the value of the currency. As mentioned before, money can be made in positive as well as negative political climates. You can make money from countries that are experiencing tremendous political unrest and rampant inflation as easily as one that is fiscally responsible and experiencing great economic growth.

The Gross Domestic Product, known more commonly as the GDP, is another huge economic indicator that experienced traders look at intensely when considering trades. The GDP is the total market value of all goods and services that are normally produced within a particular country. Normally this figure is an annual one and is not given in shorter periods. Because of the volatility of the Forex market this is considered a lagging indicator that becomes more measurable after the particular country’s economy has started to follow a unique trend.

Other important factors for Forex trading include retail sales reports, which are the total sales receipts of all the retail stores in the country, industrial production that includes factories, mines, utilities and more, and the CPI or consumer price index. The CPI is the measure of the change in the prices of consumer goods in 200 different categories. This report can show whether or not a country is making a profit or losing money on their products and services. The exports a country contributes is are very important when looking at this indicator because the amount of exports can reflect a currency’s weakness or its strength.

As you can see there are a lot of factors that need to be considered when investing in foreign currencies. It can be fun and exhilarating, but doing your homework will always pay the largest dividends.

Unless you have spent the past couple of months hiding away in a cave, you are aware that a huge number of home mortgage loans have ended up in default and even in foreclosure. Indeed, some states in the country are experiencing a record rate of mortgage foreclosure filings. In addition to problems associated with credit and lending, the stock market has been a bit bearish itself. The combination of these two factors has caused a significant amount of concern amongst economic, financial and fiscal experts and consumers.

The Federal Reserve actually has been rather proactive in working to ensure that the problems do not have any more adverse effect on the banking industry and by extension on business owners and consumers across the country. In this regard, the Federal Reserve actually has pumped nearly $80 billion into the banking system during two weeks in August.

Understanding what actions the Federal Reserve has taken, you may be wondering and why this helps the banking industry and how it will also have a positive effect on businesses and consumers alike. In order to understand the benefits of what the Federal Reserve has done this month, it’s important to have at least a basic understanding of banking regulations and practices in the United States.

The primary regulation that you need to understand is that banks in this country are required by law to maintain at least 20% of their deposits in cash. Because of this requirement, at the end of each banking day, if a bank does not have the necessary amount of deposits in cash, the bank itself must borrow money from other banks. This type of borrowing needs to take place to ensure that the bank has an appropriate cash deposit balance at all times.

The amount of interest that is charged on these types of inter-bank loans is known in the industry as the overnight lending rate. Absent the infusion of money references a moment ago that was undertaken by the Federal Reserve, the amount of money available to banks to ensure their cash deposit balances would have been tighter resulting in higher interest rates that the banks would have to pay to obtain the cash they needed to ensure proper maintenance of their cash deposit balances.

Had this tightening occurred, banks would then have to cover their own reserves by cutting back on the money they otherwise would make available for lending purposes to businesses and consumers alike. The net effect of that would have been an even more significant impact on the economy overall beyond what has already occurred due to the mortgage foreclosure and stock market uncertainty related issues.

In the end, the actions of the Federal Reserve in this instance does appear to have the desired effect of avoiding a further restriction of the amount of money available for lending purposes to both businesses and consumers alike. Moreover, this has helped to hold off even more serious economic problems at the present time and into the more foreseeable future as well.

The news media would have you think the jobs we have lost to China, India and other countries are the result of lower cost labor. They tend to blame greedy capitalists on moving production off shore to save a few pennies on the production of products sold in our markets.

The unspoken truth of the matter is that domestic producers are moving production offshore because of overhead costs. Overhead costs that are the direct result of our government. So if you want to blame someone for the jobs that are moving off shore, blame your favorite politician.

There are lots of things I can point to including OSHA, EPA, Workers Compensation, Employer Paid Pensions, Employer Paid Health Insurance, MSDS, EEOC and a raft of other government imposed programs. All of these have costs associated with them and none of them are present in India, China, Vietnam, Mexico and other low cost countries.

Today, however, I want to focus on just one government cost that is killing jobs in the U.S. and point out how the situation will only get worse if we don’t do something soon.

Jim Meyers in an article entitled “U.S. Leads World…In Corporate Taxes” in the September issue of “NewsMax” pointed out that the U.S. “now bears the dubious distinction of having the highest corporate tax rate in the developed world.” Why in heavens name would a manufacturer want to produce products and make a profit in this country? Instead, manufacturers make products and profits offshore while selling products at a loss in this country. It boils down to make your profits where you can keep most of them.

Treasury Secretary Henry Paulson in a Wall Street Journal opinion piece wrote that, “The current tax code distorts capital flows, hurting productivity, job creation and our global competitiveness.” He suggests that countries with a 1 percentage point lower tax rate will attract 3 percent more capital. Other countries have figured this out and are lowering taxes.

The Wall Street Journal reports that at least 25 developing countries have cut corporate tax rates since 2001. At approximately 39.3 percent, we are the highest and it results in receipts to the government of less than 2.5 percent of GDP. Ireland on the other hand has a corporate tax rate of 12.5 percent and collects 3.6 percent of its GDP in corporate revenues.

Even the French have figured this out and are cutting taxes under President Nicolas Sarkozy.

If you want to keep and grow the job market in this country, write to your Congressmen and tell them you want to see job opportunities in this country increase as well as tax revenues increase just as they have in Ireland through Corporate Tax reductions.

We in America live and prosper in a dynamic economy. Ours has been and is an economy of relative abundance which has succeeded in bringing about a material well-being never before known in history. It is an economy which emphasizes consumption! In this country consumption does not necessarily mean wearing out goods in a physical sense. We wear out goods psychologically as well. Our hats are discarded because they are psychologically worn out, not because they are physically done in. Usually our clothes are psychologically worn out and discarded while the material is still good. We dispose of our automobiles when they become obsolete rather than when they are physically worn out. How different is this viewpoint from the practices that are current in other nations, England and France, for instance!

It is difficult for the European to understand the economic importance of the individual in our country and the American idea of psychological obsolescence. It is also incomprehensible to most that in America we spend nearly eight billion dollars a year for advertising!

Why do we do it? What is advertising’s role in our economy? What useful purpose does advertising serve?

I shall undertake to develop my observations why advertising is essential to our dynamic way of life:

First, advertising makes jobs.

Second, advertising reduces selling costs.

Third, advertising increases company profits.

Fourth, advertising increases company security.

and finally, our enormous and growing productivity needs advertising to speed up consumption.

Advertising makes more jobs for more people. Yes, it is a fact that by creating a growing demand for new products, advertising makes jobs. A few examples. The automobile, of course, is the classic one. To be sure, it eliminated the village smithy, the buggy maker, and the livery stable, but it revolutionized our way of living and it opened opportunities never before possible. When you think what has been accomplished in the era of the automobile, when you think of all the jobs that are made possible by the five million and more automobiles sold in the United States every year, when you think what this has meant in the way of new jobs, ranging all the way from the thousands of motels, restaurants and gas stations, to the enormous development of our national parks, it gives some idea of what the automobile has contributed to our society.

Was it the first automobile, or the first hundred, or the first thousand that brought this about? No! It was the mass production of customers for automobiles that has brought the automobile to its present importance in our economy. Mass consumption made mass production possible and advertising is largely responsible for bringing about mass consumption, and the jobs, that the development of the automobile has created.

To cite another example in a totally different field, deodorants. Remember the day not so long ago when Lifebuoy was the only deodorant product with any appreciable volume? Today the deodorant business has grown to major proportions, and this has been accomplished without taking away from any other business, including perfumes! This is another example where demand created by mass consumption methods resulted in a new industry with attendant jobs, and one which has been developed without taking away from any existing business.

The new instant dessert puddings can be cited as another example. Puddings have not moved as rapidly as they might have in recent years. Along came the instant pudding and look what happened. Sales of all dessert puddings are up one-third as the result of the introduction of something new, the instant pudding, which revitalized an old and somewhat static business by the introduction of a new product idea, extensively promoted through advertising.

It all adds up to the fact that mass consumption makes mass production possible and mass production means more jobs. Advertising, because of its ability to accelerate the regular acceptance of new products and to lift the level of acceptability of established products, unleashes a tremendous flood of new demand, and new employment.

The critics say advertising causes people to spend needlessly. By a narrow definition this may be true. But our whole economy, which has brought us so much prosperity, emphasizes consumption. And psychological obsolescence is a factor of importance in that consumption.

What advertising does, and does well, is to increase what might be called the “want ability” of goods. The more want able goods become, the greater the prospect that money will be exchanged for those goods, and this in turn spells continued employment and more jobs.

The US cent has been with us for over 225 years. First as the Large Cent, then the Flying Eagle/Indian Head Cent and then the Lincoln Cent. The Lincoln Cent has been around nearly 100 years. The correct terminology is cent even though many refer to the coin as a penny.

The term cent and penny will be used interchangeably in this article. During those 225 plus years, much has changed. When the coin was first authorized, it was not the lowest denomination. The Half-Cent was. The Half-Cent was produced for over 60 years until it was determined that it no longer made sense. Is it now time to eliminate the US one cent piece?

That is the debate amongst coin collectors, congress and others. Every so often, someone in political office submits a bill to eliminate the cent, but it has always failed. Frankly, there are no solid reasons to keep the cent.

You cannot buy anything for a penny, two pennies, three pennies or four pennies. Sure, our decimal system dictates that transactions are in cents, but there are ways to get to get around that with rounding. Getting rid of the cent in circulation does not mean that it will be gone from your checking account. All electronic transactions can still be done in cents, if needed.

Another reason there is mounting pressure to eliminate the cent, is that it actually now costs more than a cent to make a cent. If any other business was producing a product that was losing money, they would stop making it. Not the US government though.

When you look at the total production of US cents over the life of the Lincoln Cent, way over 400 billion, yes BILLION, cents have been produced. The great majority of them well after the change to the current design. One would think that with all these cents in circulation, there would be an ample supply. Yet the Mint still produces around 8-12 billion more cents each year.

Although there is mounting pressure to keep the penny, the penny still does have its supporters. Many collectors have a soft spot for the penny as it is typically the first coin that many people begin to collect.

There are those who feel that eliminating the penny would hurt the poor and that retail stores will figure out a way to cheat the public out of a few pennies per transaction if rounding occurred. For example, if an item is priced at 99 cents, it will now cost a dollar. This of course is if you only purchased one item.

If you purchased that one item now, and you received back in change a penny, what would you do with it? The sad reality is, is that penny will not see circulation until you accumulate a pile of them and bring it to the bank or it goes through a counting machine after you donated it to the MDA or other collection jar by most cash registers. This brings up another point, many charities may suffer because now most people drop their pennies into these charity collection jars.

If the US government intends to keep the penny, the most critical issue facing congress and the Mint is to change the alloy to another metal that is cheaper than the current one. This may also be a short term fix as this has happened already with the cent and other denominations before.

Unknown to most people is that in 1982, the composition of the cent was changed from mostly a copper cent to a copper plated zinc cent. Few people noticed as the appearance did not change. As you likely know, silver was taken out of the other denominations in 1965 as silver made the face value of a quarter worth more than a quarter. Now the zinc in a penny is making the penny cost more than a penny to produce. It is only a matter of time before the whole US coinage system will need to be revamped.

Ancient Greece provides evidence of banking with Greek temples and some private and civic entities, conducting financial transactions such as loans, deposits and currency exchange. Credit also existed whereby a moneylender in one Greek port would write a credit note for the client who could “cash” the note in another place. There are records of loans from the 18th century BC in Babylon that were made by temple priests to merchants. Effectively the world’s first ever banks were the religious temples which were the absolute centres of the respective communities.

Charging interest on loans and paying interest on deposits became more highly-developed and competitive in secular Ancient Rome – ‘secular’ is important to note as the major religions of the day considered the charging of interest to be immoral. The expansion of trade and commerce, especially into Europe, facilitated the need for the increasing provision of financial services.

In Britain, the modern age of banking began in 1640 when King Charles I, needed cash to pay the English army that was being raised to fight against Scotland, seized the gold bullion that many merchants and nobles had placed in the Tower of London for safe-keeping. The 2nd Bishop’s War soon ended the British Parliament returned the bullion back to its owners.

Following the Bishops war in 1642, further warfare broke out with the Great Civil War between the King and Parliament. London was considered the stronghold of Parliament and was the safest city in the Kingdom. This meant led to mistrust of the government and people who did not wish to have their bullion seized by one side or the other placed their gold in the hands of goldsmiths in the city, who naturally had their own methods of safe-keeping.

In Britain Goldsmiths were considered the first private bankers. When depositors banked their gold they received ‘goldsmith’s notes’. These notes essentially were the first bank notes. People were willing to accept payment by these notes as they knew they backed 100% by a deposit of gold.

Current and future developments in banking are linked to the world-wide-web and a vast expansion of trade and commerce which have given rise to an emerging form of banking. Internet communities, functioning similarly to ancient communities, have been established to connect lenders and borrowers. Their aim is to cut out the banks. However looking at the size of lends in these communities and the lack of more complex lending ability or products we are confident that banks and banking staff will remain as important as ever far into the future.

Charging interest on loans and paying interest on deposits became more highly-developed and competitive in secular Ancient Rome – ‘secular’ is important to note as the major religions of the day considered the charging of interest to be immoral. The expansion of trade and commerce, especially into Europe, facilitated the need for the increasing provision of financial services.

Current and future developments in banking are linked to the world-wide-web and a vast expansion of trade and commerce which have given rise to an emerging form of banking. Internet communities, functioning similarly to ancient communities, have been established to connect lenders and borrowers. Their aim is to cut out the banks. However looking at the size of lends in these communities and the lack of more complex lending ability or products we are confident that banks and banking staff will remain as important as ever far into the future.