…High-frequency traders use computer programs based on mathematical algorithms to trade at rapid speed, capitalizing often on tiny moves in stock prices. The industry itself has received widespread blame for market instability. A report in Wednesday’s Wall Street Journal, for instance, questions whether exchanges give some HFTs preferential treatment in placing orders.
As for the Fed, its latest foray into the financial markets came Thursday when it announced a third and likely perpetual round of quantitative easing in which it will buy $40 billion of mortgage-backed securities each month.
The effort both will aim to drive down mortgage rates and be tied to the unemployment rate. The Fed anticipates the open-ended easing will create housing wealth that will in turn drive people to spend more money, revitalize the economy and encourage hiring….