Fear and greed travel at the speed of light now

With the advent of a perpetually connected population, social media, and less than accurate information spreading like wildfire, we have entered in to a perilous paradigm. Where misinformation can travel at the speed of light, and became a pervasive part of the prevailing narrative.

It’s happened before.

In the case of fear, we’ve seen the equivalent of people yelling “FIRE” in a crowded theater. But now, with high levels of Internet connectivity and information reaching a global audience instantly, fear can traverse the borders of states and countries and have a meaningful impact in the shortest time with the broadest reach that we’ve ever witnessed.

Similarly, greed has found its way to propagate at unprecedented speeds, fueled by the possibility of instant gratification and the desire to capitalize on the latest trends or investment opportunities. Social media platforms and online forums have become breeding grounds for speculative bubbles, as more people are enticed by the prospect of quick returns and jump on the bandwagon.

The speed at which information and emotions travel on the Internet is both astounding and concerning. Just a few decades ago, news and opinions took time to disseminate through traditional media, providing a buffer for fact-checking and reflection. Today, however, the instantaneous nature of digital communication means that people can react impulsively to both fear and greed, often with far-reaching consequences.

In the financial sector, for example, rapid shifts in sentiment can trigger dramatic fluctuations in stock prices. A single tweet or rumor can send markets into a frenzy, with investors rushing to buy or sell based on little more than hearsay.

This can lead to market instability and, in some cases, the loss of billions of dollars in mere moments. Late last year a fake, but verified Ely Lily account on Twitter was able to send shares tumbling when a rumor was spread that insulin would be made free.

When a rumor spreads that a bank doesn’t have the capital available to make depositors whole, that can spread rapidly, like a wildfire, and consume the discourse, with social media accelerating the impact.

Such a rumor may cause depositors to begin pulling out capital rapidly, putting a bank’s ability to satisfy those requirements under strain. Not because they don’t have the money, but instead because the deposit base may be allocated into yield producing investments that may not be liquid and easily sold on demand. This is one of the factors that exacerbated the collapse of Silicon Valley Bank, for example.

Fear and greed really do travel at the speed of light now. With the increasing digital interconnectivity of society, it is ever more important that we verify the quality and accuracy of information we may be using to make important decisions.

Misinformation and even worse disinformation can spread rapidly, and have profound consequences if people believe it. Critical thinking becomes ever more important. Everyone has a role to play to ensure that we’re verifying the accuracy of the information we consider sharing or acting upon.