Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?
This is your opportunity to ask questions. No question too simple or too silly.
Culture war topics are accepted, and proposals for a better intro post are appreciated.
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Notes -
There's modest consensus around here that Vivek & Elon firing half of the government would be a good thing, and that most of those workers are largely vestigial parasites/culture warriors who don't productively contribute to society.
What would the practical effects be of Trump pulling a Xi and dropping the hammer of god on wall street and hedge funds, HFT outfits, etc.? Say you can keep venture capital and bank loans to businesses and all the other stuff, but the 'quants' who make a living with options, trading commodities and the like? I'll leave it to someone better versed in that world to carve out precisely what should or shouldn't be banned, or try to convince me that this is a mistake.
The friends I have in that space freely admit that they don't believe that they contribute meaningfully to society. They have advanced degrees in physics, math and CS; wouldn't society be better off pushing them towards engineering, manufacturing, company creation? And redistributing capital from the non-STEM people at these places who contribute nothing of value to society?
Most HFT shops are mostly doing market making. Market making (i.e. quoting bid and ask prices and making a profit when other people cross your spread) is essential for well-functioning markets, and computers do it better than humans (and have done since shortly after 2000). The problem is the sheer amount of elite human capital going into a competition for speed which is now effectively zero sum because computers are placing and cancelling orders faster than a real-money investor can make decisions. To fix this without chasing away the market makers the markets rely on to function, you would need microstructure-level reform carried out by someone who knows what they are doing.
The most interesting proposals I have seen are:
Thank you for having tactical answers to this question. From the basic research I've done, it seems like the primary way to fix this stuff is to slow things down.
The only convincing steelmen I've heard for keeping things "as fast as possible" is:
Any others you can think of?
The steel man for keeping things as fast as possible is that anything artificial we impose might be worse and fucking up market making would be a pretty big deal. So much money hinges on that a regulator really cannot afford some dumb solution that benefits a single arbitrary party or is open to abuse. It's not an unsolveable problem, but just letting people compete on speed does solve it pretty well, so there's not a ton of incentive to fuck with what currently works.
Crypto is trying a bunch of different things to solve their version of this (They refer to it as MEV, basically the problem of block producers reordering transactions to extract value by front-running), and solving it algorithimically at the protocol level in a way that doesn't have some sort of drawback is currently proving really difficult.
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