The ultimate criterion for whether automated trading is socially useful is the profit-and-loss test.
If the financial institutions relying on these programs blow up in the long run, we’ll have our answer — if only the government and Fed would stay out of it.
Archive for the economic utility (of trading) Category
From The Cobden Center:
The key is uncertainty. The future is not known; if it was, then the central planners might stand a better chance. But the future peculiarities of individual desires and wants can never be known, so there are always highly uncertain outcomes inherent in planning for the future. The world is too complicated to simplify into maths or bureaucratic diktats. The risks are too great and the mistakes too expensive. What we need is a mechanism to attempt to put a price on future outcomes. We need to “crowd-source” the answer to the problem of resource allocation. And, that’s what speculation is…