If Not For Government Regulation, There Would Be No Wall Street As We Know Today

Imagine for a minute you are a small town worker in the middle of nowhere, US. You decide you want to invest some of your paycheck into something that will give you a good return. Your local grocer wants to expand his shop and is looking for investors. You go there ever day and know him well. There’s a pharmacist on on your street trying to get investors for a business expansion of his own. Your maybe you’ll invest it in a fund for yourself to do something you always wanted to someday.

But then your banker tells you “Hey! I’ve got the greatest investment scheme ever Buy stocks of a random company in this exchange that trades stocks based all the way in New York City. Sure it’s only 600 miles away, but it’s a perfect place for your money!”

This was how Wall Street originally was before the Government got involved.

Wall Street as we know it today is nothing like it would have been had the government never began regulating it. The irony here is that people in America tend to blame Wall Street for everything. Left or Right, working Americans hate Wall Street. Even some wealthy Americans hate Wall Street too. Most have never been to Wall Street, and never will, and probably wouldn’t know what it looked like if a sign didn’t say Wall Street. But the term has become synonymous with greed and opulent wealth and somehow its wealth stolen from everyone else. This is slightly incorrect. Before Wall Street, people weren’t necessarily swimming in money that Wall Street stole from them. But they’d never put their money there either.

Regulations of Wall Street ironically started because rich people wanted it. In the days before government involvement of the stock exchange, no average person or investor would invest in the stock market. It was too risky of a venture, and in a free market capitalist society, it didn’t make sense.

Still, the few people who did invest in it were very the very rich, or today’s 1%. Only they had the extra money to play around with, and the stock exchange acted almost as a casino. You might get lucky and strike gold with an investment, or you might get scammed and lose your fortune. It was a wild place if there ever was one.

Because of this, the rich people who loved taking high risk began getting tired of being ripped off. So what does anyone do when they feel something isn’t fair? They get the government involved.

The government as a result passed the nation’s first blue sky laws, to try and regulate the market and make it a fair playing field. This proved disastrous for the country. Almost over night, what was seen as a risky fool’s game became a guaranteed honey pot. Banks and small investors suddenly felt that with the government’s rubber stamp of the industry, it was now safe. And so you had a 20 year bubble start growing with more and more people putting their money into it. Up until the day the stock market crashed. Since then, the regulations have piled onto Wall Street, but the troubles continue to get worse. That’s because Wall Street isn’t capitalism. It stopped in 1911.

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