When the housing market crashed in 2008, the affects were amplified by day traders that used computer programs to quickly make trades. These programs are so efficient that stocks can be purchased and sold in a tiny fraction of a second. While this allows aggressive investors a way to make large earnings that would not be possible by human means, the system is particularly vulnerable to dramatic shifts in the market. The result was a disaster compounded greatly by technology that sent the markets into a free fall. The initial cause of the downfall may have been bad loans not properly vetted by greedy and unscrupulous investors but technology also played a major role here.
Although one would think we would have learned our lesson the first time, unfortunately these programs are still in use today. To combat this, regulators have proposed adding a small transaction fee to discourage overaggressive trading. With powerful lobbyists opposing the measure as expected, the potential for greedy investors to bring us down again has economists and federal regulators deeply concerned. Will technology and greed be our ultimate downfall? Only time will tell.
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