Financial History and Growth of Banking and Credit

As of today, money has grown and played such a powerful role in everyone’s life. Back to 500 years ago, South American society The Inka doesn’t have a real concept of money just like the communist society as they appreciated rarely mental such as gold, silver, and Labor as currency. However, this turns out to be a battle of resources and became not efficient. This history had illustrated the need for money in human life. During the 16th century, Europe experienced price inflation due to the silver overflow from south America.

This happened because there was no understanding that money is not always silver or gold, but that is just what somebody else wants to offer. It can be paper, sugar, or even the works of clay. Money is a question of trust, trust in the person paying for us and trust in the individual who issues the money, and until it was possible to trade USD for a quantity of gold, money lending (credit) is belief.

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Nowadays, only 11% of the cash is in the American hands of the US total (M2). Thus, the rest 89% is virtual, which is from a credit card you spend or transfer money from the bank account. Since Roman times, European is struggling with the Romanian alphabet. But Arabic numerals help them to do mathematical easier. Fibonacci introduces 'The Book of Calculation' using Arabic Numerals to Europe.

However, Venice took this theory and later, became the great money lending laboratory. In the 13th century, Venetian Jewish do the business of money lending.

Many merchants come to Jews' ghetto to borrow money. However, for the Christians lending money with interest was a sin, and this belief became a major problem for Europe to develop their finance. Moneylenders had to deal with a trade-off. But, when they were too soft, they gained no money, and when they were too rough, the borrowers would go. Thus, they need to become bigger and powerful. Hence, the Banking system was invented in northern Europe. The Medicis were the first money lenders that change financial success to heredity power and survival. They had great multiple partnerships in the European country. They achieved it by learning a crucial lesson in finance which is smaller ones in finance are hardly ever beautiful, and by diversifying their loaning, they were lowering their default opportunities. This method was later copied and further developed by other countries, such as the Swedes and Netherlands. Today, we can find a lot of places to borrow money, especially in the United States. The American legislation worked to promote creativity and to give entrepreneurship a break-even after numerous defeats when things were not going well. Also, to understand the cause of bankruptcy, we need to understand security.