Meltdown Monday simply put the seal on a contraction process that had gone on since early September. This adds a philosophical fallacy to Myth 1. By definition, if stock prices fall, this means that they had been previously overvalued. The crash came about because of computer trading, which in association with stock index futures, has made the stock market more volatile. It is also a variant of the old Luddite fallacy of blaming modern technology for human error and taking a crowbar to wreck the new machines.
People trade, and people program computers.
A major cause of the crash was the big trade deficit in the U.S. Nonsense. There is nothing wrong with a trade deficit. In fact, there is no payment deficit at all. In that way, a big trade deficit results in a zero payment deficit. But, say the advocates of Myth 4, the terrible thing is that the U.S. has, in recent years, become a debtor instead of a creditor nation.