The flash crash (and high-frequency trading in general) is really only symptomatic of a deeper underlying problem - the modern stock market has no fundamental reason to exist. When the concept of stocks originated, it was a way to own part of a company. Companies paid dividends, and so if they did well then they sent you (the investor) a check in the mail. In that way, stocks could be thought of as investments where the payoff was receiving profits in the mail.
But the stock market has changed into something different and really bizarre. Everybody knows that a company's profits and stability are what drive its stock prices. But why is that? Although a few stocks pay dividends, these days most don't. And to the common investor who holds a small percentage of overall shares, I don't think there's any easy way to _force_ dividends out of a company you own stock in. In a theoretical sense I could buy up enough shares of the company to force them to pay me dividends, but that's not something the average investor can realistically achieve.
That means that the the only payoff possible from my stocks is the money I could make by selling them. This is really strange if you think about it. If I'm never going to see significant dividends from Google, so their financial success or failure should have no underlying reason to affect stock prices. If the ONLY thing stocks are good for is selling them to somebody else, then they have no intrinsic underlying value. They don't pay dividends. I can't take them over to Google HQ and say "here's my share of the company, I'd like to take this office furniture now."
It's like the stock market has changed from a way to invest in companies and share their profits to some strange cult where everybody's drinking the kool-aid and the only people winning are brokerages. People put their retirements, their life savings, into something that has no intrinsic value whatsoever. It seems like the market is essentially dependent on an having ever-increasing influx of new buyers, like a sort of giant distributed pyramid scheme. To me, it's not a question of _if_ the stock market will collapse completely but more a question of _when_. Nothing logically inconsistent can endure forever.