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In the economic sense, leverage is the process by which a company individual, entrepreneur or investor is able to greatly improve the return on an investment by way of the use of borrowed cash.
In 2015, our members provided £110 billion of new finance. £81 billion of this was in the form of consumer credit to help purchases ranging from vehicles to household goods and £29 billion was provided to businesses and the public sector, representing almost 32% of UK investment in machinery, gear and purchased computer software in the UK last year.
And the important players in that are not just central banks, but the whole industrial banking sector. Simply because truly, it is not like most cash claims take the form of physical notes any more. Most are information entries, binary code imprints on hard drives of computers within information centres controlled by industrial banks. The act of making and moving monetary claims about in such a system is the act of editing databases.
On monetary policy, there will be a push to drive up interest rates by numerous. There is a broad view (I’ve heard as practically concensus at locations like Bloomberg Radio) that if the Fed would just raise prices it would advantage portfolios and spur the economy. This is an extremely myopic and uneducated view of how the economy functions but I believe it will be the view held by those taking power in Washington DC. It will be exciting to see if Fed Chair Janet Yellen is allowed to preserve her post. In the end, the much more Washington tries to push up interest prices at the reduced end, the far more they will come down at the larger end.
Monetary funds often name themselves soon after mythological figures – like the colossal Cerberus Capital Management styling itself after the 3-headed hellhound of the underworld – but the mythic figure of Robin Hood does not match comfortably inside regular financial culture. In one version of the legend he’s a guy who steals from the rich to give to the poor, a champion of financial redistribution. In one more, he’s a guy who dares to poach deer in the king’s private forests, a rebel against privatisation of widespread land. Redistribution, equality and protection of public commons? These are not items that monetary institutions usually specialise in.