The three powerful agencies controlling and overseeing the finances of any country are the Finance Ministry, the Central Bank and the Stock Exchange. The impact of the Stock Exchange on the economy of the country and conversely, the impact of the economy on the Stock Exchange are profound. On many occasions the developments and trends in the stock exchange give jitters to the Finance Ministry as well as the Central Bank and they initiate the corrective measures, to the best of their ability and judgment. Sometimes such measures work; on many occasions, they are counter-productive.

The US Stock Market is one of the very powerful financial institutions in the world. The history of the stock market goes back to two centuries, and stocks worth billions of dollars are traded every year.

Wars invariably result in disaster and suffering but this one was a good product of war in USA?the Stock Exchange. To fund the war, the government floated bonds. The bonds were meant for sale to the private citizens, who bought them from the investment point of view. In 1792, 24 merchants joined in a meeting at the now famous Wall Street. They possessed varied stocks and securities and that meeting was the beginning of trading of stock for investment. They decided to meet everyday for the purpose in view. The New York Stock Exchange was thus born as the outcome of this meeting.

The practice started by the US Government turned out to be an import tool of trade and industry and the same practice continues till date. To finance their new projects, private enterprises began to float and sell stocks. A large number of investors availed the opportunity to better their fortunes. Before 1921, the trading of stocks in New York took place on the street, but thereafter the traders moved indoor. The giant buildings housing modern Stock Exchanges can be seen in countries all over the world now.

Very interesting things happen in the Stock Exchanges, the crashes and the booms in the stocks, the rise and fall of the stock market index, but what happened in the year in 1929 has no parallels in US history. A record of 16.4 million shares was traded that day and the investors lost assets worth $ 100 million. This loss initiated ?The Great Depression? in the US history. That was the period of untold misery for the people of US.

Knowledgeable financial experts strongly believe that all is not well with the US Stock market now. Hard times are ahead for the US, as too much of financial engineering goes against the normal economic health and that may lead to frustrating developments for the US economy.

The prudent investors are staying out of the US stock market now. The bubbles of speculative froth in the economy are bound to burst and this will cause unprecedented problems for the US economy. The camouflaging exercises in the investment sectors, like the record margin leverage by individuals and the risky deals, do not contribute to the healthy growth of the economy. Stock Markets play an important role in this doomsday exercise for the US economy.