MWU / School for Political Science, Public Policy & Geopolitics: Fw: The Market Is Rigged_Excerpt_High_frequency trading vs. the culture of inflation

Tuesday, May 6, 2014

Fw: The Market Is Rigged_Excerpt_High_frequency trading vs. the culture of inflation

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From: Financial Markets Research <groups-noreply@linkedin.com>

Date: Tue, 6 May 2014 21:21:36 +0000 (UTC)

To: Bob Sefcik<mainandwall@gmail.com>

Subject: The Market Is Rigged_Excerpt_High_frequency trading vs. the culture of inflation

When Michael Lewis's new book Flash Boys came out, the author caused a stir while making the media rounds to promote it. "The market is rigged," he told 60 Minutes flatly. His comments set off a firestorm of debate as to whether sharp techies and their fast computers are screwing small investors. This trading system has created an opportunity for enterprising entrepreneurs to make a buck and, some would say, make the market more efficient. Others see it differently. Matthew Phillips at Bloomberg Businessweek takes the opposite view. Speed traders and retail investors are not playing the same game, he writes. High-frequency traders are competing against each other to fill retail investors' orders. "The majority of retail orders never see the light of a public exchange," writes Phillips. Large wholesale firms compete to fill these orders. "These firms' algorithms compete with each other to capture those orders and match them internally. That way, they don't have to pay fees for sending them to one of the public exchanges, which in turn saves money for the retail investor." THE CULTURE OF INFLATION The cultural effects of inflation create this HFT debate in the first place, because it is financially fatal to leave one's money in cash as government continually erodes its purchasing power. As Jörg Guido Hülsmann writes in The Ethics of Money Production, inflation deprives people "of the possibility of holding their savings in cash." Professor Hülsmann explains that the elderly, widows, and orphans "must invest their money into the financial markets, lest its purchasing power evaporate under their noses." SENNHOLZ FORESAW THIS NEW INVESTING CLASS OF ONE-PERCENTERS ALL THOSE YEARS AGO, WHEN HE WROTE, "A SMALL NEW MIDDLE CLASS OF TRADERS AND SPECULATORS REPLACES THE OLD MIDDLE CLASS OF INVESTORS, AND HUGE NEW FORTUNES ARE CREATED FROM THE LOSSES SUFFERED BY INVESTORS AND CAPITALISTS." A MORE SOUND CURRENCY, WHETHER METALLIC OR DIGITAL, WOULD SPREAD A HEALTHIER CULTURE: ONE NOT SO OBSESSED WITH SPECULATION, WEALTH, MATERIAL GOODS, AND NANOSECONDS. Source: The Freeman Foundation