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Securities Exchange Act of 1934

See Also:
Secondary Market
Securities Act of 1933
New York Stock Exchange (NYSE)
Primary Market
Sarbanes Oxley Act of 2002 (SOX)

Securities Exchange Act of 1934

The Securities Exchange Act of 1934 deals with the regulation of secondary market transactions, or outstanding securities in the market (which can be traded on a daily basis). The Securities and Exchange Commission (SEC) regulates this act.

Securities Exchange Act of 1934 Meaning

The Securities Exchange Act of 1934 was established after the stock market crash of 1929 – the following Great Depression. The 1934 Securities Exchange Act is meant to provide meaningful and relevant information to the average investor. This ensures that the investor is not mislead in anyway so that they are able to make well informed decisions. The Securities Exchange Act regulations include the need for quarterly and annual audits by an accounting firm. These accounting firms then attest to the accuracy of the statements.

The Securities Exchange Act of 1934 thus ensures that there is no fraud that exist within the company. It also deals with insider trading. If an investor has information that is non-public in nature then, then under the 1934 Securities Exchange Act, he/she may not act on it until the information has gone public. The idea is to provide a fair and equal market so there are no unusual transactions to set the market adrift.

securities exchange act of 1934

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What is Deflation?

What is Deflation?

What is deflation? Deflation is the decline in the price for goods and services. It can also be referred to as the increase in the value of real money. In other words, it’s the value that the current currency will go up per unit of goods or services.

Deflation Explained

Deflation often occurs when the demand for goods or services drops. As this happens, the price of the current supply will often drop in order to meet demand. Deflation economics often happen during large recessions or depression times. Furthermore, deflation should also not be confused with the term disinflation which refers to a slowing effect of inflation or a slow increase in the price of goods and services.

Deflation Examples

Some common examples of when deflation has occurred are times like the Panic of 1837, the Civil War, as well as the Great Depression.

The Panic of 1837 was the first major time that deflation occurred as people rushed to banks there was an overall drop in the money supply as well a major decrease in the price of goods and services.

During the Civil War, there was another era of deflation as the United States set the dollar on a gold standard and reduced the amount of money printed during the war. This caused an overall drop in the money supply and therefore an overall drop in the prices.

Finally, the Great Depression was a time in which many banks failed and the ability to gain money became difficult thus causing deflation to occur and the price of goods to fall dramatically. This period of deflation is probably the most dramatic because of the time in which it took to climb back to normal levels of inflation.

what is deflation?

See Also:
What is Inflation?
Treasury Inflation Protected Securities (TIPS)
Consumer Price Index (CPI)
Supply and Demand Elasticity
Economic Indicators

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Economic Reset

I just returned from the Microsoft Worldwide Partner Conference 2009 in New Orleans. At the conference I heard Steve Ballmer discuss the direction of the economy over the next several years. He believes that the world economy is going through an “economic reset”.

Economic Reset

According to Ballmer ,the world economy becomes overheated every twenty-five to thirty years. Credit expands until the economy becomes so heated that risk is priced out of the market. In other words, there is so much money chasing too few good deals. Ballmer pointed out that total debt reached 350% of GDP in the United States at the height of the most recent boom. Prior to the Great Depression, that figure was only 150% of GDP. He believes that the economy won’t resume growing until that figure comes down significantly.

He contends that every 25 to 30 years the economy “resets” itself at a lower level thereby flushing out the high leverage and poor investments. Because this process takes time, he believes that the recovery will not be the quick rebound many predict.

Consequently, companies should be prepared to restructure their businesses to survive at a lower economic level. It will be difficult, if not impossible, to grow revenue in this environment. Instead he suggests that companies should focus on increasing market share.

Economic Growth

Finally, when economic growth does resume it will not be fueled by debt. The growth will need to come from increased productivity. Because IT continues to change and most companies are stretching the life of their IT infrastructure there will be pent up demand once the economy grows.

So what should you or your company do to survive in these tough economic times? First, evaluate the effectiveness of your marketing dollars. For those marketing initiatives that work, you should increase your spending.

Second, invest in processes, tools, and training to improve your productivity, both personally and as a company. Acquire new skills and capabilities to prepare for when the economy does start growing again.

If you want to further develop your financial leadership skills, then click below.

Economic Reset

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