During an appearance on CNBC yesterday, Charlie Munger, deputy to billionaire investor Warren Buffett, had some harsh words for high-frequency trading, the practice used by huge financial firms to trade stocks in milliseconds. “Take the rapid trading by the computer geniuses with the computer algorithms,” said Munger. “Those people have all the social utility of a bunch of rats admitted to a granary.”

As a new report from Demos makes clear, high-frequency trading definitely is the equivalent of admitting rats to a granary, as it extracts value for traders but without bolstering investment. The price of that is ultimately paid by consumers:

The increasing inefficiency of the Capital Intermediation process is in part attributable to the trading practices of [high-frequency traders] HFTs, which generate high trading volume and no investment. The cost to the system is generated by several factors. First, the illusion of market liquidity provided by HFT volume leads to the inherent instability of market pricing mechanisms. In addition, aggressive HFT tactics mislead market participants in terms fundamental price. Finally, Dark Pools, trading venues that exist because of HFTs, impair price discovery.

All of these distortions extract value for the HFTs. Investors pay the cost initially because their investments are less valuable in conditions of chronic price distortion. However, investors must compensate for the additional cost that results from the extracted value by adjustment of price. This price adjustment is paid for by the consumers of capital.

High-speed trading now makes up more than half of the stock market’s volume. As this chart from the research firm Nanex shows, high-frequency trading has exploded since 2007, spiking in the aftermath of the Great Recession:

The Securities and Exchange Commission voted yesterday to draft new rules to rein in high-frequency trading. Doing so would both drive investment to productive sectors of the economy while removing dangerous volatility from the market like that which caused 2010′s “flash crash.”

The Great Recession destroyed trillions of dollars in wealth and economic output. Amd in what looks like a measure of good news, most of the household wealth that was vaporized is back. However, it’s almost all going to the rich:

Surging stock prices and steady home-price increases have finally allowed Americans to regain the $16 trillion in wealth they lost to the Great Recession. The gains are helping support the economy and could lead to further spending and growth.

The recovered wealth – most of it from higher stock prices – has been flowing mainly to richer Americans. By contrast, middle class wealth is mostly in the form of home equity, which has risen much less. [...]

The upper-income Americans who have benefited most from the nation’s recovered wealth don’t tend to spend as much of their money as Americans overall do.

But they’ve gotten a lot richer. The Dow Jones industrial average has just set a record high. Since bottoming in March 2009, the Dow has jumped 119 percent. Roughly 80 percent of stocks are held by the richest 10 percent of households.

For the past five years, middle-class Americans have sold stocks and missed out on much of the rebound. During 2012, Americans dumped $204 billion in stocks, the Fed’s report showed.

While the stock market has roared back to record highs, home equity is only recovering slowly, and worker wages have been stuck in neutral, barely moving. The richest 1 percent of Americans have captured 121 percent of the income gains since the recession, meaning that everyone else is worse off in terms of income than they were before the crash.

Corporations have also captured a disproportionate share of the recovery. Since 2008, corporate profits have actually risen 20 times faster than worker incomes. According to a study from economists at Northeastern University, “corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1%.” So while it’s a good thing that wealth is slowly being rebuilt, it’s not yet helping the vast majority of the country.

The American economy added 236,000 jobs in February and the unemployment rate dropped to 7.7 percent, its lowest level since the end of 2008. Job creation was bolstered by growth in housing and health care as well as aggressive monetary policy from the Federal Reserve, but the economy now faces the threat of sequestration, the automatic budget cuts that went into effect March 1.

The Congressional Budget Office estimates that sequestration will cost the economy 750,000 jobs and knock more than half a point off of economic growth in 2013, threatening the economy that, while still plagued by high unemployment, is slowly chugging toward a recovery. And while Republicans argue that sequestration and other spending cuts are necessary to rein in America’s out-of-control spending, government spending has actually plateaued since President Obama took office:

Past recoveries have been bolstered by government spending and this one initially was too, thanks to the stimulus bill Obama signed into law in 2009. Premature deficit reduction efforts and the perpetual crises caused by Republican demands to cut spending at every turn have, however, hamstrung the recovery ever since:

Government employment has shrunk by more than half-a-million jobs since Obama took office, the worst period of job losses in that sector since World War II. Governments lost another 10,000 jobs in February and that number will almost surely rise in subsequent months as further spending cuts take effect. If the government employed as many people as it did in 2008, unemployment would be 7.2 percent; if government employment had grown as steadily as it has in the past, the unemployment rate would be at least a full point lower.

With borrowing costs at historic lows and growth still lagging, now would be a perfect time for the United States to avoid sequestration altogether and invest in infrastructure and other job creation efforts in order to grow the economy and avoid the fate that has befallen austerity-obsessed European countries, which are now experiencing second (and even third) recessions.

Instead, Republicans have repeatedly blocked efforts to make the investments the economy desperately needs and Washington has remained convinced that America’s problem is that the government is spending too much, even as economic reality shows that the only spending problem America has is that the government isn’t spending enough.

According to the latest data from the Bureau of Labor Statistics, 236,000 jobs were created last month, bringing the unemployment rate down to 7.7 percent. Analysts had expected 160,000 jobs.

The private sector created 246,000 jobs, while the public sector again contracted, losing 10,000 jobs. The wider U-6 measure of underemployment fell a tick to 14.3 percent.

BLS revised the number of jobs created in December up from 196,000 to 219,000, and the change for January was revised down from 157,000 to 119,000.

40.2 percent of workers have been out of work for six months or more, continuing a persistent problem with long-term unemployment.