> However, did major markets ever really have a huge problem with lack of liquidity, 20 or 30 years ago before HFT?
Yes. It used to be that humans were the market makers. Humans are (generally) a lot more expensive than computers so providing liquidity came at a higher cost. Bid/ask spreads used to be much higher.
HFT it just an example of computers replacing humans at a lower cost. A phenomenon that can be observed in many industries.
Humans are also far less transparent than algorithmic market makers. Talk to professionals about the specialist system. It's (words chosen carefully) hard to take anyone seriously who pines for the good old days of 1970's and 1980's trade execution.
Yes. It used to be that humans were the market makers. Humans are (generally) a lot more expensive than computers so providing liquidity came at a higher cost. Bid/ask spreads used to be much higher.
HFT it just an example of computers replacing humans at a lower cost. A phenomenon that can be observed in many industries.