Hillary Clinton deserves a spot in the pantheon of prophetic media critics.

Early 20th century media critics were some of the first to describe how false news was easily propagated through the media system. A local newspaper would run an inaccurate item. With the advent of the telegraph, these stories could and often were republished over the next week in newspapers across the country.

As Max Sherover wrote in 1914 of newspapers, “The stories they have forwarded are obviously composed in large part of wild romancing. They snap up the most improbable reports and enlarge upon them with every detail that their fancy can suggest.”

In my book, I call this “trading up the chain.” The practice more or less continued for the next century of journalism, amplified by the popularity of radio and television news.

But it was Ms. Clinton, who in 1995, noticed and predicted the effect the internet would have on this cycle. According to a recently released archive from the Clinton Administration, she and her advisors expertly spotted how political groups could use the internet to advance bogus stories.

As they outline in the report:

“This is how the stream works: Well-funded right wing think tanks and individuals underwrite conservative newsletters and newspapers such as the Western Journalism Center, the American Spectator and the Pittsburgh Tribune Review. Next, the stories are reprinted on the Internet where they are bounced into the mainstream media through one of two ways: 1) the story will be picked up by the British tabloids and covered as a major story, from which the American right-of-center mainstream media, (i.e. the Wall Street Journal, Washington Times and New York Post) will then pick the story up; or 2) The story will be bounced directly from the Internet to the right-of-center mainstream American media. After the mainstream right-of-center media covers the story, congressional committees will look into the story. After Congress looks into the story, the story now has the legitimacy to be covered by the remainder of the American mainstream press as a ‘real’ story.”

When she made her famous statement about a “vast right-wing conspiracy” this is what she meant. This is stunning, not because of how clearly it articulates how blogs spread news but because it was written before blogs even existed. (Ironically, my source for these papers was WorldNetDaily, which is as much a part of the problem as any site out there).

Whether she was right about the conspiracy being politically motivated or not is besides the point—there is indeed a real problem here.

And that problem persists nearly 20 years later.

At the first level, we have the thousands (or millions) of bloggers who scour the web for topics to fill their posting quotas, which require them to publish several times a day. They look at local news, press releases, and rival blogs to find material. At the next level are hundreds of mid-level journalists who use these bloggers below them as sources for their own stories. These are your traffic hounds like Huffington Post, Complex, Business Insider, Mashable and others (and increasingly legacy media projects like Smartmoney.com, Mainstreet.com, BNet.com, etc.) At the highest level are national websites and television stations like the New York Times, the Today Show and CNN, who look to these mid-level outlets and news aggregators for leads they wish to turn into a national story.

And now it seems as though we should add a “level zero” to this framework with blogs using Twitter feeds, Facebook comments, and anonymous secret sharing apps like Secret and Whisper as sources in their stories. Gwyneth Paltrow was recently accused of having an affair because the “editor-in-chief” of a secret sharing app said so. Or, a waitress can create a news conflagration with a simple Facebook post. The accused family’s reputation was tarnished, but at least it did a lot of traffic for everyone involved.

The structure of the system creates massive need—thirst really—for content. And as a result they regularly borrow, steal, and yell over each other to get traffic. Only the flimsiest of sources are required for a narrative to get traction.

As marketer, this is initially pretty attractive. You can make stuff up and immediately get headlines for it—and those headlines grow bigger as the story is traded up the chain. But it has real repercussions too.

I’ve watched the consequences of this system play out plenty of times with my own clients. A story about American Apparel might leak to Gawker with an anonymous email and lead to a ridiculous (and untrue) story. Then the fashion blogs pick it up. Then the Huffington Post and Business Insider follow suit. The next thing I know, CNN is calling asking if we’d like to comment. And the next day, I might be summoned to the CFO or chief counsel’s office where I am told that an investor is very upset about this latest report, and asked if anything can be done. In this way, a fake story became “real.”

In other words, Clinton’s chilling scenario has largely come true…as a nightmare for politicians, businesses, and public and private individuals.

Take the Shirley Sherrod story from 2010. It began with a cleverly manipulated video posted on BigGovernment.com. The video, depicting the USDA official Ms. Sherrod as a racist, was first picked up by FoxNews.com and the Gateway Pundit blog, before ending up on the Drudge Report and every morning show in the country the next day. Then, though thoroughly debunked, the story was hotly debated at the top level of the media chain for the next several weeks.

More recently, there was the 2012 story that Republican South Carolina Governor Nikki Haley would soon be indicted on tax fraud charges from work related to the Sikh Religious Society. Thanks to a defamation suit filed by the Sikh Religious Society, we know that the story got its start when a blogger tweeted about it, saying he had “two well placed legal experts” as sources that turned out to be a local blog and a local television reporter. After the tweet, the story was picked up by the Daily Beast, Daily Caller, and the Drudge Report.

The speed at which the Haley story started and was shot down (the next day, she provided a document from the IRS stating they wouldn’t investigate) shows how quickly something can shoot up the chain with just the slightest shred of attribution. But thankfully because of the defamation suit this was one of the rare cases where there was some consequence to a journalist starting a bogus story: a written, public apology and release of the names of his two “sources.”

Of course, sometimes far-fetched but nevertheless accurate stories break on blogs and are traded up the chain. Rob Ford’s crack smoking scandal broke on Gawker. Gawker, notorious for admitting they don’t care whether a story is true or not, broke the story with their supporting evidence being the reporter had supposedly seen the video in a parking lot. But this was enough for the story to spread up and down the chain until we all more or less believed that Ford was a crackhead.

That the claim was eventually verified doesn’t change the fact that this was pretty spurious evidence upon which widespread public opinion was built. It also says something about our current media system, that though there was a lot of outrage and chatter about the story, nothing really happened to Rob Ford because of these allegations, other than netting him an appearance on Jimmy Kimmel (and boosting that show’s ratings).

Ultimately, where you get your news doesn’t protect you. If you read the print New York Times everyday, you’re just as exposed as someone who furiously refreshes Twitter. All our news is fruit from this poisoned tree.

Reporters aren’t always out pounding the pavement looking for original stories—they get their leads from other media outlets. And that’s what marketers and bad information exploits.

Trading up the chain, although often odious in its results, is not malicious. It’s a natural outgrowth of human tendencies and of course, structural problems with today’s media system.

It is a thread we can trace back to a prescient Hillary Clinton in 1995 and the critics far back before her. And with ever increasing social media tools at the disposal of major media properties to create these stories, the chain is getting faster and easier to manipulate.

It’s the same century-old problem, now with 21st Century technology.

Ryan Holiday is the best-selling author of Trust Me, I’m Lying: Confessions of a Media Manipulator. Ryan is an editor-at-large for the Observer, and he lives in Austin, Texas.