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User Info Leverage on stock/commodity/currency trading in forum [Newbie]
Mickanomics
Posts: 91
Incept: 2009-09-08
Green
London
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Correct me if I'm wrong... but I get the impression that in the old days people who wanted leverage in these markets would borrow money, then use that money to invest. They would of course have to pay interest on their borrowed money. A side effect of this process is that it increase the money supply (through fractional reserve banking).

These days it seems that people can get leverage without any borrowing involved. They can just effectively make leveraged bets on the changes to a stock/commodity/currency price change. This removes the need to pay any interest, and also presumably does not affect the money supply because no money needs to be borrowed.

My question now is, has the old-fashioned type of leverage for trading completely disappeared? And if not, why not?
Critter
Posts: 538
Incept: 2008-01-26

iowa
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if people got loans in order to invest in the old days then people must have been more foolish than they are now. that would be stupider than renting a large screen t.v.,or a couch,or refrigerator.

oops
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