From Legal Leverage to Scriptural Money Creation

I Definition:

What is leverage? Leverage is a term used to describe a mechanism that allows a company's profitability to be increased through borrowing, supposedly, because the debt must always be repaid.

Personally, I prefer to define leverage as any mechanism that allows one to increase their available funds immediately.

II Different Leverage Effects:

In the stock market: more specifically, for securities, we can say: A leverage of 1:1 means that the economic agent trades exclusively with their own funds; the ratio between the deposit and the volume of the open transaction is 1:1. Having $100, the economic agent also invests $100.

A leverage of 1:1000 means that the economic agent opens an order with 1,000 times more funds than they actually have. With $100, the economic agent invests 100 x 1,000 = $100,000.

In commerce: an entrepreneur, when creating their business, leverages their employees.

Indeed, they will produce assets that are immediately payable, while they are paid at the end of the month. A good example: internet companies doing business with consumers.

In banking: there are commercial transactions that have a leverage effect, such as factoring: a financing technique implemented by companies that consists of obtaining advance or immediate financing in exchange for the assignment of their receivables. Thus, an internet company that does business with client companies obtains the money from factored receivables immediately. The leverage effect lies in the fact that it pays its suppliers in thirty days or more.

In industry: leasing, a system allowing the acquisition or use of movable property (car, professional equipment) or real estate without borrowing. For example, a company acquiring a car or professional equipment on lease pays rent to use the acquired assets. Thus, a taxi company collecting its fares immediately increases, or rather, multiplies its available funds tenfold.

In reality, credit itself is a form of leverage depending on whether one increases one's debt to a greater or lesser extent. In all the examples I've given, there is a more or less formal credit transaction.

Finally, in law: there are also mechanisms that facilitate financial leverage: any right that immediately increases available cash but without debt. An exempli gratia: in the case of fraud,

A lends money to B. B becomes poorer for the benefit of C.