I also worry about crowd psychology in the current economic situation. Although this same crowd psychology caused hoarding during the great depression, I see a new component that could speed the process significantly and that is information technology. There are many news sources where stocks can be seen decreasing precipitously, during which commentators or journalists reiterate just how precipitous a drop might be (internet, TV). I imagine during the 1930’s people got their information from newspapers, radio and word of mouth; a much slower process. I wonder if Bernanke is considering this accelerated transfer of information in the timeline for a modern day economic depression.
