Here we verge upon a different type of explanation of the financial crisis--one of a psychological nature.

The quantity of money, we have seen, affects prices more or less according as credit is more or less used in connection with it.

Money plus confidence has a larger power of sustaining prices, than money without, or with less, confidence.

And throughout the business cycle the amount of confidence, expressed in such ways as the readiness to grant credits and in the easy extension of the time of collection, is constantly changing.

Over-confidence at one time is suddenly followed by widespread lack of confidence.