Lack of Regulation

Extracted Attributes

• Historical Period

  Pre-1929 Stock Market

• Historical Outcome

  Contributed to Great Depression

• Key Characteristic

  Complete absence of oversight

• Consequence (Market Impact)

  Fueled speculative bubble

• Modern Parallel (Investment)

  AI investment (potential monetary bubble)

• Consequence (Market Behavior)

  Enabled market manipulation

• Consequence (Financial Practice)

  Allowed massive expansion of leverage

• Modern Parallel (Financial Market)

  Private Credit market (potential hidden leverage)

Timeline

• A major shift began with organizations like General Motors pioneering Consumer Credit, changing American attitudes towards debt and setting the stage for increased leverage in an unregulated environment. (Source: related_documents)

  1919

• Period characterized by a complete lack of regulation, allowing for unchecked insider trading, market manipulation, and massive expansion of leverage, fueling a speculative bubble. (Source: summary, related_documents)

  1920s

• Contributed significantly to the Stock Market Crash of 1929. (Source: summary, related_documents)

  1929-10-24

• The consequences of the lack of regulation and the crash triggered the Great Depression. (Source: summary, related_documents)

  1930s

• In response to the crash and depression, the Glass-Steagall Act was passed, and the New Deal policies were implemented. (Source: related_documents)

  1933

• The Securities and Exchange Commission (SEC) was established to prevent insider trading and market manipulation, addressing the historical lack of regulation. (Source: summary)

  1934

Market maker

A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the difference, which is called the bid–ask spread or turn. This stabilizes the market, reducing price variation (volatility) by setting a trading price range for the asset. In U.S. markets, the U.S. Securities and Exchange Commission defines a "market maker" as a firm that stands ready to buy and sell stock on a regular and continuous basis at a publicly quoted price. A Designated Primary Market Maker (DPM) is a specialized market maker approved by an exchange to guarantee a buy or sell position in a particular assigned security, option, or option index.

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