Leverage

In the physical world this has a very literal meaning. The useful work done is the energy applied, which is force times distance. Therefore a small force applied over a long distance is the same amount of work as a large force applied over a small distance. The trick is converting the one into the other.

The simplest device for creating leverage is the lever. A lever is a stick which rests on a fulcrum near one end. When you push the long end of the stick down a long ways, the short end moves a small distance up with great force. With this device a man can easily lift several times his own weight.

Other common devices that achieve leverage include the wrench, various pulley arrangements, a jack, and hydraulic brakes.

But leverage is also used with more metaphorical meanings of the word force. For instance, in finance people think of money as "force." Given a relatively small initial amount of force (money), you can use that as collateral for a much larger loan, which gives you a larger amount of money (force) to throw around. Therefore in finance it is common to call debt "leverage."

Referenced By