Speed

Wait, wait, you're listening to Radio Lab from WNYC. Lulu. Ladeff. Radio Lab.

Today we got for you just, it's really a classic radio lab. It's called Speed, but I would call it timeless. It's totally great. It's a total classic radio lab.

It's about things moving faster than we can perceive. And also things moving slower than our patients can handle. And it includes moments like this one. Everything that I'm experiencing already happened.

So grab your lava lamp, sit back in your beanbag chair. Enjoy. Will you forgive me if I actually leave my phone on Vibrate? Because my wife is pregnant and do literally any day.

No kidding. If this vibrates, I might ruin your radio program. It does. No, it's fine.

It's fine. I had a conversation with this guy, Josh Four. He's a journalist. He's a journalist.

He's telling about something that's been obsessing him recently. This very odd experiment. Well, okay. So this is one of the longest-running science experiments of all time.

You can actually see it online. How do I get to it? I just search for a picture of a picture of it. So when you go to this website, what you really see is this funnel with some black stuff in it.

And then descending from the stem of the funnel is a little tendril of this black stuff. And at the end of that tendril is a little teardrop of this black stuff. That's it. Doesn't move.

Do anything. But according to Josh, there are a picture of junkies all over the world. People who have just got this open in the background on their web browser. He says they all just sit there watching and waiting.

And that's the thing. Once you understand what's going on here, you kind of can't look away. Okay, so here's what happened. In 1927, there is this guy Thomas Parnell, who is teaching physics at the University of Queensland in Australia.

And he's trying to show his students that, well, I guess things aren't always what they seem. Okay. And so he takes a chunk of this material called pitch. What's pitch?

Okay, so pitch is a natural substance. In fact, this is actually really the question. What is pitch? Well, what does it look like?

It's like a gooey? No, that's the thing. It's like a rock. You can break it with a hammer and it shatters into a million little pieces.

But it's not a rock. It's a visco-elastic polymer. A visco-elastic polymer. Which means that over many, many, many years it moves.

Really? So what he did was he melted a handful of pitch and poured it into a glass funnel. And once it had properly settled, he snipped the bottom of the funnel and waited. For what?

Well, for it to drip. You mean dripped like a faucet with drip? Yeah, but much, much more slowly. So 1930, Pluto is discovered.

Bonnie and Clyde, we get killed by the police. 31, the Empire State Billings finished. No drip. 1933, the Nazis build their first concentration camp.

Pro-vision ends. Still hasn't dried. 35 million air heart, 5 still low across the Pacific Ocean. No drip.

1936, 5 million barrels of cement turned into the Hoover Dam. No drip. For eight years this rock is slowly, slowly, slowly stretching into this dangling drop. And then suddenly one day, eight years after he poured the damn thing into the funnel in the tenth of a second, the blink of an eye.

A drape. The pitch breaks. Now, nobody's ever actually seen this happen. I mean, it's never, the drop is never dripped.

No, no, the drop is dripped eight times. And we're all due for the ninth drop to happen any day now. So wait, why haven't they seen that? So imagine a science experiment, right?

Where the critical data that you want to gather happens in one tenth of a second, every 10 to 12 years. It is really hard to be there at that critical moment. Yes, because I mean, yeah, the professor John Meanson, he's been watching it. Yes, religiously.

Since January of 1961. For 50 years. I am still waiting to see this pitch drop. Just out of suspense, or is there some question here?

Well, first of all, during... Well, okay, the question is, at that moment, when you... this ever-longating droplet gives way, what happens? If you've got the drop itself held by four little fibers, call them fibers.

What breaks first? How does it break? And there are lots of people who, like me, are waiting to see whether we can capture that moment and see the way in which, from a mechanical point of view, it becomes imperative that the drop didn't fall. So, 1962.

Meanson, Mr. Drop in 1962. August 1970. Missed that one.

April 1979. Pat won. He looked at it on a Friday. Knew it was close.

And thought, well, something might happen over the weekend. Came in on a Saturday. Saturday evening. Checked.

The pitch dropped. Nothing happening. I'm going home. And by the time I came in very early on the Monday morning, not having gone in on Sunday.

It did fall. Then... No. He thinks he may have missed it as little as 15 minutes.

He had dropped. Did you take your tea and throw it against the wall and rage? Yes. Well, yes.

One thing comes a bit philosophical about this. And I just said, oh, well, let's be patient. The next time he installed a camera. And then, and then, and then, 28 November 2000.

Yes. What happened then? At the time I was over on the other side of the world in London. He gets an email saying, Professor, this eighth drop looking as though it might fall anytime.

We've been waiting 10 years for this. It's about to happen. Because it was like, I said, don't worry. We've got it covered.

We've got a camera on it. We've got to see exactly what happened. When I get back to Australia. The next email said, well, it's dropped.

Later that day, do you have Professor Maynston? I've got the news. Unfortunately, you will not be able to see this because the system failed. The camera went out.

The camera went out. We don't have this on record. Come on. That was one of my saddest moments, I might say.

But right now, the pitch is getting ready to give birth to another drop. And this time, there are three cameras, three webcams on there. And this is what Joshua's showing on the internet. This dangling little...

almost. All these people are watching. People from China, South America, people from the North of Canada. So everybody's waiting.

Everybody wants to be the person who sees the pitch. Oh. I've been checking this thing online. Really?

You like watching Grass Girl? I don't know. It's more than suspense. I think that this is...

It's about time scale, is what it's about. We don't really have that many opportunities to interact with things that happen on these two very, very different time scales simultaneously. Do you know what you mean? Yeah.

Because you know, you can... In this funny situation, you wait slower than you know how. For something to take place that's faster than you can, you know... Catch.

Exactly. So you're playing at the very edges of what you know how to do. But not if you catch it. Then you get this glimpse into this world that's usually...

Unknowable. Exactly. So for the next hour, we're going to mess around with this idea because, you know, we're humans. We live in a human scale.

But we've got a bunch of stories that are going to ask us to stretch that scale. So the breaking point. Yeah. I'm Jad Abumran.

I'm Robert Crowe, which... Today on Radio Lab. Speed. We think you get faster and then faster again.

And then faster and faster and faster and faster and faster and faster and faster and faster and faster. Until. We get to the fastest thing in the universe. Cool.

Okay, so let's set the bass lines here. How fast are we? You mean like, how fast do we run? I mean, how fast do we interact with the world around us?

How fast do we taste things? How fast do we feel something? See something respond? Hello.

Hello. Hey there. How do we sound? That sounds better.

Excellent. That's Carl Zimmer, of course. Science writer. Regular round here.

And you told us that question you just asked? How fast do people, humans, process the world? That question. Popped up in a really big way around 1850 with the invention of a telegraph.

Because suddenly you can send a message across the country almost instantly. If you're in New York and you want to send a message to Chicago. Albert, send money. It's going to take about a quarter of a second for that message to get there.

It's coming to the bus for a rubber coat. That's 790 miles in a quarter second. Now that's really fast. In fact, if you do the math, I post it in 90 times 4 times 60 times 60.

It's 11 million miles an hour. That's amazingly fast. So fast in fact that some people when they first used a telegraph, they just refused to believe that it was real. Because in 1850 you're doing 35, 40 miles an hour on a horse.

Well, 60 maybe on a steam engine up to 80. You're not living too fast. No. So when a telegraph got people thinking about us, about our bodies.

Right. Because you know. Nerves and telegraph wires are remarkably similar. Nerves are long and skinny.

They carry electricity from one place to another. Just like telegraph wires. So naturally people wanted to know, well if telegraph wires can do millions of miles an hour, well what about our nerves? How fast are they?

Exactly. And so one day a German guy. A biologist named Herman von Helmholtz. Took a frog.

His errands are kind of like ours. And basically what he did was he... He hooked some wires up to one of the frog's muscles. Now this was, I should tell you he did frog, but he sent an electrical jolt through the muscle and then using a very fancy timer he was able to determine.

That the signal was going down the length of the frog muscle at a speed of 27 meters per second. What is that in miles per hour? Meters per second. Let's see.

I can... Google actually. I love Google. 27 meters per second is 60.397.3 miles per hour.

60.3 miles per hour. Wait, is this the frog? Is it the same speed in us? Yes.

60 miles an hour? That seems so slow. What's the name of the Jamaican runner? The fastest guy in the world?

Usain Bolt. Usain Bolt is running at half the speed of his nervous system. Okay, but bear in mind actually, I mean, there's a big range of speeds of your neurons and... Actually Usain Bolt is much faster than some of your neurons.

I mean, there's some neurons that only go about a mile an hour. Which ones are those? Ironically, some of them are from the reward centers of your brain. Chocolate travels slowly?

Yeah, relatively slowly. What about pain? That would be fast dimensions. Yeah, he thinks so, but pain actually runs kind of slowly.

I'm surprised to learn. He says it can be as slow as 1.3 miles an hour. Wait a second. So if I put my hand near a candle and then I go ouch.

Shouldn't that happen very fast? Look, I mean, if you were like 70 miles tall, this might be a problem. Okay. But still, I mean, what if you just take a really ordinary example?

Like Robert looking at the desk in front of him and grabbing that pen. What's involved? Yeah, well, I mean, you just essentially need to kind of walk through this brain. You start at the eye.

Okay, so the eye takes the light, it's reflected off the pen, turns it into a little electrical signal, and then sends that deep into the middle of the brain. Takes a couple hundredths over a second. Bounces around for a bit, and then within few more hundredths of a second, the signal has made it. All the way back to the rear end of the brain, where you start processing vision.

But this is just the beginning. Right. Now you gotta like figure out what you're seeing. So our jolt is off again.

This time toward the middle of the brain and then down toward the bottom. To these other regions. It starts to decode the signals. The first visual region is called V1.

Next up, V2. V4 and so on. And they're gonna sharpen the image, make out contrasts, edges. And then electricity goes back towards the front of the brain.

After, let's see, another tenth of a second or so. We finally get to a place where we think- Oh! That's a pen. We haven't gotten yet to it.

I want it. Exactly. For that to happen, the electricity has to jump from one part of the front of the brain to another, and another before you can finally say- That's a nice pen. I could use a pen.

And we are still not Dutch. You know? Then then- Little jolt. It's north.

To the top of your brain. So we've gone from the back of your brain around up to the front of your brain again, and now we're up to the top of your head where you set up motor commands. And then you can grab a pen. Christ!

So I mean, you add all this up, and what are we talking about here? About a quarter of a second. Quarter of a second. It feels like one month later, rubber time, begin slowly to move to the upper- Quarter of a second.

So that's the same amount of time it takes a telegraph to send a message from New York to Chicago. Yeah, so your eye, your hand, New York, Chicago. Oh man. The sad truth says Carl is that our neurons when it comes to communicating and sending signals on your own server.

They're terrible actually. I mean, compared to our broadband networks. Particularly because when one neuron bumps into the next one, there's actually a little space between them. So the signal to get across has got to jump.

And then jump to the next one. And jump and then jump. It's kind of like doing hurdles. It's not smooth.

And the spooky part about the slowness says Carl. The deeper thought here is that if you think about it, because we have this built-in delay in processing the outside world, everything that I'm experiencing already happened. You know how you look out at the stars and you think, oh, that light's been traveling for thousands of years to get to me. And what's happening on that star or the planet around that star right now doesn't even still exist.

You can say that about everything around you. Because, I mean, by the time that you become aware of something in front of you, it's been sitting there for a while. Well, tell me speaking. I'm stuck in the past.

But it sounds like if you want to be in the moment, then what you do is you stare up at the sun and you let the light just be light entering your eyes. You don't think anything about the light. You don't try to comprehend the light. You just let the light be light.

And that's as close as you're going to get to now. Well, you're looking at old light. It's eaten as old as a star. No, it's old light.

Even if you switch on the light and you're looking at the light bulb across the room, it's old light because it had to go from your eyes through your brain to you to be aware that there was light there. So what I would suggest is that you close your eyes and you stop thinking about the chair you're sitting in and just focus on your own thoughts because that's the fastest stuff you've got. It's right there. You don't have to wait for it to be delivered and you're already in your brain.

So I think your thoughts are the fastest things that you can experience. So my fastest thought that I could ever have is where are my keys? You've got to have faster thoughts than that. What's a faster one?

It would be non-narrative. I don't think it would be a key or something. I think it would just be like a... Somebody slaw about this.

What it wasn't me because I had no idea. Do you think somebody has an answer for us on this? Hello. Hello.

Somebody somewhere. I'm here. In fact, we found a guy. Are we recording right now?

We are. His name is Seth Horwitz. I'm the author of Universal Sense, How Hearing Shapes the Mind. So we were talking with...

And we ran Seth through the question, you know, if we're all trapped in the past by the slowness of our nervous system, what would be the most present, the most in-the-now that we could be? Well, if you... And he actually disagreed with Carl's guess. He said, even if you think the simplest thought that it is possible to think...

It's probably still going to be on the order of a quarter of a second, half second. Oh, man. You have to get away from the conscious brain. No thinking, no seeing.

Hearing is the fastest sense because mechanical, it normally operates on the millisecond range, thousands of a second. A sudden, loud noise activates a very specialized circuit from your ear to your spinal neurons. You mean it bypasses the brain? Yeah.

It's the startle circuit. You suddenly hear a loud noise within 50 milliseconds. It's 50,000 seconds. He's talking 20 times faster than cognition.

Your body jumps, will begin the release of adrenaline. No consciousness involved. It's five neurons. And it takes 50 milliseconds.

50 milliseconds. So you're already getting into a faster, much faster paradigm by using sound. So if we're going to jolt ourselves as close to the present as possible, then we'd have to play a really loud noise. Right.

Like... Wait for it. This. I know that was annoying.

I know. But the thing we just did together, we were all in the moment. In the present tense. They're not quiet.

Not as we now understand it. We were just shy. It gets shy at the moment. But in the last time, if I spoke fast enough, for me to say thank you to Carl Zimmer, they could have said, and now go to break.

There's no way you could even form the thuh of thank you in 50 milliseconds. But I tell you what, in this next segment, we're going to make 50 milliseconds feel like 50 years. Oh, that's a really, really nice promo there. That'll make everybody lean in.

That's actually a terrible, terrible promo. Terrible. We will amaze you by slowing down time so that you will find a millisecond generous... You will surprise yourself in all kinds of ways that you just stay listening to this program.

Believe me. Right there. We know. Good save.

Ready? Hey, I'm Jada Poonron. I'm Robert Proliche. This is Radio Lava.

Beat. Sorry, I said that. Actually, this whole next segment is about. See, I had it in my bones.

Just to set it up, I got this idea from my friend Andrew Zolli, who is a fantastic writer, wrote the book, Resilience, Why Things Bounced Back. We read a diner. I was telling him about the show, and he says, you should do something about the stock market. And I was like, I'm the last person should do something about the stock market.

He's like, no, no, no, forget everything you think you know about the stock market. Most of us, when we think about stock markets, if you just close your eyes and you think about the financial world, what you imagine is a bunch of people in a room and they're all wearing funny colored jackets and they're shouting at each other and waving bits of paper. This kind of raucous. My team is 23.

People screaming and trying to figure out what a crisis is. And we have this sort of iconography, this cultural iconography of how the financial system works that is in large part completely divorced from reality. Because he told me, here's my first surprise, that somewhere between 50 and 70 plus percent of all the trades that happen on what we think of as Wall Street are not executed by a human being as a result of a human decision. They're actually executed by an algorithm at a speed, rate, and scale that is beyond our comprehension.

So I decided I would try and comprehend this new world that he was describing. And since this is a subject matter that generally makes me frightened, I decided to call up David Kestenbaum for Planet Money. Hey, Jeff. Hello.

The David Kestenbaum. Indeed. There could be more than one. I'd like to play it for either of us, just how fast, how inhumanly fast trading had gotten until we visited this firm called TradeWorks.

Hi. Hi. This is Mr. David.

So we go into this little building in New Jersey, it looks like it's a startup or something, and the sky says hello. My name's Mike Beller. I'm the Chief Technology Officer of TradeWorks. And Mike, sets down this computer, opened up this little program that logs exactly what is going on at the market at insanely specific times.

If you could pick a stock, we could look at Yahoo, for example. We can literally pick some time of day that we're interested in. What time is this? This is at 11.35, 26.9, 7.9 seconds.

Really? And in fact, that's not enough precision for us because we really deal in microseconds. That would be millions of a second. So we have another way of measuring time, which is the number of microseconds since midnight, to the previous day.

Can you read that 4.17 number? Sure. 41 billion, 729,979,559 microseconds. So do you always have lunch at like $2,305,000?

No, that would be really early. How many of you have trades do you do in a day? I think it depends. A lot.

A high frequency trader might do 1,000 trades in a minute. It's about that tempo. But it's kind of very bursty. Now what happens during those bursts is a bit of a mystery.

It's very hard to see what's going on. Often, since Andrew, it's the computers testing the market testing to see if they can find a nibble on the other side. They'll fire out a bunch of buy-in cell orders, and then when another computer bites on one, they'll quickly cancel the ones that instead. No, sorry, didn't want to do that.

And they're doing this on a microsecond basis. Buy. No, sorry. Sell.

Sell again. Forget about that. Buy. And they create huge volumes of transactions that just disappear into the ether.

There are some computer algorithms, he says, whose whole job is to combat... Other algorithms. Fake them out. For example, we just...

a very good example. It happened about a month ago in Kraft. That's Eric Hundsander. He tracks high-frequency trading for the firm NANX.

Kraft like Kraft Cheese. Yes. He says what they saw was this algorithm jumping to the market, buy up a bunch of Kraft, which jammed the price up, which allowed that algorithm to sell at much higher prices to the other algorithms. We calculated out, it cost them 200,000 to push the price up, but they were able to sell about 900,000 of stock, and netting a gain of over half a million dollars.

In a matter of seconds. Now, to put that in context, back in the day, you know, 20 years ago, when the humans still ran the trading, they were able to sell about 900,000 of stock, and netting a gain of over half a million dollars. And then you go in the humans still ran the trading pits? 500!

According to this guy... I'm Larry Tab, founder and CEO of The Tab, the average time that it took to execute a trade was... Around 11, 12 seconds back then. And when you ask people, how did we get from 11 or 12 seconds to...

49, 79, 79, 500, 51,000. Phrases like that. The answer is kind of surprising, but I'll just start with the obvious part. At least the part that's obvious to people who work in finance wasn't obvious to me.

But a basic law of the market is that the fastest person will usually win. There's always a benefit. That's Andrew again. To getting information faster than the other guy.

Absolutely. Since Julius Reiter's used, Terry or Pigeon... To send a bunch of stock quotes. Faster than a guy on a horseback.

That was in the 1850s. Here's a more modern example. Say the latest job numbers come out. US employers added 227,000 jobs in February.

If those numbers are good, that means the stock market is going to go up. So if you can get the numbers and rush to the market before anyone else gets there, and buy the stock before it goes up, you can make a lot of money, right? On the, you know, buy low, sell high principle. Basic law of getting rich.

But when the markets turned electronic, which began to happen in the early 90s, this basic law created a situation that was totally bananas. What do you mean? So imagine it's the year 2000. You've got this market in New York.

It's electronic. It's basically just a building on Broad Street near Wall Street with a giant computer inside of it. It's matching buyers and sellers. And you have a bunch of traders in different parts of the country that are connected to this market, to this building.

And some of them are using automated trading bots. And one day, this guy Dave Cummings, who is in Kansas, notices that his robot keeps getting beat. Like when it would send a trade to New York, like say a buy order, often, right as that buy order was about to get to New York, some other robot would swoop in, get there first and snatch up the trade. And it occurs to this guy Dave.

Wait a second. Is it because I'm in Kansas? If the other guy is closer to New York, then his cable would be shorter. So I need to move to New York.

No, no, no, no, because we're talking about the speed of light. Well, close the speed of light. Obviously, it's because he's in Kansas. What do you mean?

Because the speed of light is like a foot and an second. You can get your ass kicked if you're in Kansas. I don't know. Do you know this for a fact?

Yeah, it's a foot and an second. It's a foot and an second. It takes a billionth of a second to go a foot. It's three times 10 to the 10th.

I mean, everybody knows. I know this because when I was in physics, like if I needed to delay a signal by an an second by a billionth of a second, I just added an extra foot and cable. Did you really do that? Yeah, because the proton anti-proton would collide and then it would create a muon that would go out and you only wanted to measure, you want to filter all the junk so you knew when it was going to arrive roughly.

So you got a little like window head to arrive and window head to get the timing of the window. Right, so it meant like adding a delay and we just would add cable. That was the easiest way to add. You would literally go get some from cable and just splice it in.

That's why, they're limo connectors. Oh, they're limo connectors. Here's another way to think about it. Like say the time it takes for information to get from Kansas to New York is something like this.

Did you hear that? I did. First people when it leaves Kansas, second people when it arrives in New York. Yes.

Actually slowed that down just a bit so we can hear it better. But the point is that is fast but there's still a little space in there between the beeps which is the travel time. Very, very little space. But even if these signals are traveling at millions of miles an hour close to the speed of light, if somebody is a few hundred miles closer to New York than you and they leave at the same time as you, well then it's going to be like, do you hear that?

Yeah. That beep in the middle is some other dude beating you by a few milliseconds. These little differences matter? They're trying to get in and out super fast and maybe each trade they're only making.

A fraction of a penny. That's it, says Andrew. But if you're making a fraction of a penny, millisecond after millisecond after millisecond. You can add up, right.

But you have to be able to react really fast. So when this guy in Kansas decided to move his robot to New York to get closer to the big market computer? When this happened, it started kind of a land grab. There was a real estate bubble around some of these buildings because people were trying to buy physical real estate next to the exchanges so that the cables that they would run into the exchanges would be just a few feet shorter than the other guy.

So does this mean like if I'm like one stop up on the elevator and you're two stops up and I have the second floor advantage? I mean, how far do you do this? Theoretically, yeah. I mean, that's what it means.

I don't know how far this real estate jockey got because pretty early on the people who run the market stepped in and they're like, okay, this could get crazy. So they told the machine traders, okay, you want to be close to us? Fine. Pay us some money.

We'll let you come inside. Inside our box? Inside the mothership. Is there like some room where all these computers are keeping each other company now?

Oh, yes, there it is. If you visit the New York Stock Exchange now, which we did, after going through months of security checks, what you see is... It's in the magic itself. Where the trade's actually happened.

Amazing. Wow. Wow. So this is what?

20,000 square foot, four. This is Ian Jackie's head of infrastructure at the New York Stock Exchange. He showed us around. With a number of rows of racks for customer agreements.

In 2006, New York Stock Exchange opened up this room. It's the size of three football fields filled with nothing but... Mose and mose of service. Different specific.

So these are owned by banks, hedge funds, brokers. Yeah, all number of financial institutions. Are these things training right now? Absolutely.

Each of these computers, and there were close to 10,000 in the room, give or take, where at that moment analyzing the market, making decisions to whether to buy or sell, sending that decision over a cable into an adjacent room where it gets bought or sold. Yeah. No people involved. If you stood still for a few seconds, the lights went out.

They automatically went off at nothing. Because the assumption was there were not going to be people there. And the whole idea of this place is again? The whole premises is a level playing field.

So any phone can come in here and they'll have the same access as anyone else. Then to make sure of that, it's in my favorite part. Every single rack within this facility has the same length of cabling to get to the network points at the end. Exactly the same length?

Exactly the same length. Everybody gets the same length cabling. Whether you're one foot away from the network hub or 1,000 fee away, you get the same length. I'm sure they send synchronized test pulses from both your trading computer and jazz trading computer and they make sure they arrive exactly at the same moment.

I like to imagine they have a guy with a tape measure. That's the guy you bribe. That's the guy you would think. Anyhow, you would think that since all machines can now be inside the exchange, literally inside the market building, that the speed race would be over, right?

No. Actually, it only gets worse. Because the place we visited at the New York Stock Exchange, that's just one market with many. I didn't know this, but apparently when all trading went electronic, the market's not going to be over.

In the New York Stock Exchange, it was the New York Stock Exchange and then it was NASDAQ. Really just those two markets, it was Larry. Now there are 13 regulated exchanges. There are roughly 50, what they call dark pools in the marketplace.

They're non-public, basically. Yeah. So you got these 60-some-odd different markets and that's created all these different speed races between them. Yeah.

Here's a super basic example I talked about with Andrew actually. In Chicago, you've got this thing called the commodities market. Commodities are basic goods like corn, oil, soybeans, zinc, pork. That's what they do in Chicago.

Here in New York, we do equities. An equity is a share of a company. So you have basic goods in Chicago, stocks of companies in New York. Those are different kinds of things, but they're connected to each other.

You know, because like, take oil, which is traded in Chicago. A lot of companies depend on oil and they're traded in New York. So say oil goes up in Chicago, you can pretty much bet that right after that, a company like Exxon is going to go up in New York. But it won't be instantaneous.

Right, because information has a speed. Back in the days of telegraph, it's learned it took a quarter second. About that long. You get from New York to Chicago.

Now, with five-ropped of cables, about 15 milliseconds. I love it. I know I do. You can actually hear the time difference.

That one I think is pretty accurate. 15 milliseconds. But say you're in Chicago, oil goes up. You know it.

And you can get to New York in 14 milliseconds. Well, you've got one millisecond where you know the future. You know exactly what's going to happen. You're not even betting at this point.

This is easy money. So what happened over time was a race of people to provide the straightest fiber line between Chicago and New York. That's Mike Beller again from TradeWorks. He's part of this race.

A couple of years ago, a company came along. Not his, unfortunately. And spent some eight figures on to cut a straighter fiber line between those two points. According to some reports, they blew through a mountain to do it.

They did a lot. And where the state of the art for communication lines at the time between the two locations was about 15.5 milliseconds. They came along and they made that state of the art 13.3 milliseconds. A savings of about one millisecond each way.

Which is just an ION. It's a thousandths of a second you're talking about. It's not an ION. Well, it's an ION when your computer system is able to make a decision in ten microseconds, which are so.

That's ten times faster. So your computer's like, I can do this so fast by just waiting, waiting, waiting, waiting for the news for Chicago. So a lot of us were sitting around thinking, what can we do about this? Turns out there was a way to get from Chicago to New York a little faster.

Because the speed of light through air, it's a little faster than when you're going through a fiber optic cable. And so what they're doing now is they're building a series of towers so they can beam the signal through the air from one tower to the next tower to the next tower, all the way from Chicago to New York. And that would bring the travel time down to about. In the neighborhood of around eight and a half milliseconds.

If you're going from 13 to eight and a half? No. That would be going from this to this. I mean, come on.

That's a lot of potential savings. I can totally hear the difference. Is it helping? Is it?

Are we fast enough now? Can we stop? Here's the thing. That's Minos Narang, the CEO of TradeWorks.

He joined us for the interview. And he told us, actually, we would love to stop this arms race. Yeah, absolutely. The arms race is a huge drain on resources.

But he says, we just can't. As it stands, when a new technology comes out that makes it possible to be faster. If I don't adopt it in my competitor's zoo, I will lose out to them. I have to do it.

And looking at Minos in particular, you can kind of tell it. This is part of the job. It's just like the plumbing. Yeah, it just kind of makes them weary.

Yeah, I couldn't care less. Why not just call it truce? And everyone say, we're not going to try and go faster. We're already way faster than any human can think.

It's fast enough. Why not? Because there's a such thing in Game Theory called Prisoners Dilemma. And someone will cheat.

You can't put a gun to everyone's head and force them to abide by this truce. Even though we'd all be better off if you could. Well, who would be better off? And here Minos told us, look, even though this speed race sucks for us, it's actually helping you.

Because on a basic level, anytime you replace a human with a computer, things are going to get faster, they're going to get cheaper, and now that machines are competing, getting cheaper still, in 1992 it would cost you about $100 to trade a thousand shares. Now, ten bucks. So, yes, humans have been completely supplanted when it comes to short-term trading. And humans who complain about that are being disingenuous.

They have not been displaced by anything other than the fact that they can't compete. You seem like you've had to seem defensive. Well, just because I can explain the economics of the business don't make me defensive. That also sounded defensive.

If Minos did sound defensive, it's only because he and Mike and everyone in their industry have had to answer a lot of questions over the past few years about where all this speed is taking us. And those questions always come back to one particular day, May 6, 2010, when things got a little fruity. We hadn't had a down day in a long while. The market had been slowly creeping up for quite a while.

That's Eric Hunsander again, the analyst who's been tracking high frequency trading. He says that day, even though things have been going really well. That day it started off down pretty hard. Which made some sense because there was bad news coming out of Athens, people were nervous.

But then, at a very specific moment, 242 in the afternoon. 14, 42 in 44 seconds. I'll hell breaks loose. Neil, let me just interrupt for a second because this market is dropping precipitously.

It just went negative 500, it is now negative 560. 50 is an offer, 70 is an offer. It's a countdown trading it out, 50 is an opportunity. And on the screen, the Dow was losing about 653 points.

Now Dow is down 707 points. 80, 40 is a trading it out, 70 is an opportunity. Boom, there it goes. Look at this market.

It continues to slide. Look at it. 835. This is the right as we have seen it in here.

Now it's down 900. Wow, almost 1,000 points. This is what both people out the big way like you can't believe. Cancel all orders.

Get 1,000 points. Cancel all orders. At 245 in 27 seconds, an emergency circuit breaker shuts off. For 5 seconds.

And that was the end of the slide. When it went out and stopped for 5 seconds, that was the bottom of the market. 1,000 points down. Several hundred billion dollars.

Vanished. Two and a half minutes. Equally weird. When trading started again, the market bounced right back up.

About two and a half minutes later, it was 600 points higher than the bottom. It was like f-buying? Now these kind of swings had happened before, but never that fast. And the speed is one thing.

Arguably what's more troubling is that we still, two and a half years later, don't really know what happened. I mean, the SEC invested for months released this giant 8.4 page report where they essentially blamed the whole thing on one bad algorithm. But this guy in New York was trying to sell a bunch of stocks told his computer to do it, his computer just did it a little too aggressively. No.