| Casinos and government sponsored lotteries are | | | | other types of economic cycles as well. |
| selling hope, only. But financial services provide real | | | | Examples are: |
| benefits. Today I want to talk about those | | | | - yearly seasons |
| benefits, apart from the most obvious one, | | | | - product life cycles |
| namely to facilitate payments between all | | | | - economic cycles of boom and bust |
| members of a society. | | | | Every economic cycle contains a time to invest |
| Resource Allocation | | | | and another period to profit. Financial services let |
| The financial service industry allows us to move | | | | us keep resources for later use and allow us to |
| resources along a time line. Banks do this by | | | | focus your resources where they promise best |
| selling investment products and by providing funds | | | | results. |
| for those, who can use them productively. In one | | | | How is this done? People are born and die, new |
| sentence: help us to use economic resources | | | | projects are started and concluded every single |
| where they serve us best. | | | | day. Some produce currently more resources |
| Humans cannot exist without moving resources | | | | than they consume. This happens most often in |
| through time. Every child needs to grow and learn | | | | the middle of a life cycle. Others need a current |
| before creating value and earning income. Thus | | | | net input of resources. The results can be |
| the generic provider of financial services is the | | | | smoothed by connecting people and projects in |
| family. Parents care for their children and hope to | | | | different phases. |
| get in return care when they are old. | | | | Speculation |
| Handling Cycles | | | | Seasonal cycles and boom/bust cycles of the |
| Financial Service companies help us to allocate | | | | economy need another type of financial services, |
| resources as needed along economic cycles. One | | | | the accumulation of tangible goods. For example |
| example is a life insurance company. You pay a | | | | surplus farm products are stored in summer and |
| small amount every month for a very long time. | | | | autumn. We eat them in winter and spring. Almost |
| In exchange we receive monthly payments after | | | | no fresh food grows in Europe in January, but |
| retiring. We use financial services to smooth out | | | | hungry mouths are still around. |