Mind Your Money: A Social Media Fueled Bank Crisis, Perpetual Pessimism in Finance, & Tech's Layoff Cleanse

Hosts: Morgan Housel, Doug Boneparth
Guest: Amit Goldenberg (Assistant Professor, Harvard Business School)
Date: March 28, 2023

Episode Overview

In this episode, Morgan Housel and Doug Boneparth dissect recent developments in finance through the lens of human psychology. From the tech industry's ongoing layoffs to widespread economic pessimism and the unprecedentedly swift Silicon Valley Bank crisis, the hosts—joined by psychologist Amit Goldenberg—explore how emotion, herd mentality, and especially social media are shaping market outcomes and personal finance sentiment.
The central thread: Social media isn’t just a platform for news—it’s an amplifier of emotion, accelerating contagion, panic, and even shaping collective behavior in ways the financial world is only beginning to appreciate.

Key Discussion Points & Insights

1. Tech Layoffs & "The Year of Efficiency"

(00:37–04:33)

• Widespread layoffs are hitting the tech industry, with companies like Meta and others trimming their workforces.
• Morgan notes the oddity of highly paid, overqualified tech workers sitting idle:

  “There were these like very highly paid, like high six-figure PhDs hired at Facebook or Google with nothing to do… I understand why a company would do that. I also understand why an employee would be so livid about this.” (01:17)

• Doug sees clients experiencing these layoffs but notes jobs are often reposted at lower salaries, questioning how real the layoffs truly are.
• Morgan discusses the historical mismatch between job postings and actual hires—pointing out that labor-market extremes tend to overshoot in both directions.

  “Extremes lead to extremes… It’s going to be crazy in the other direction on the way down.” (03:34)

• Speculation on whether a broader recessionary layoff wave is imminent, or if psychology is fueling labor market panic.

2. Labor Shifts Post-COVID

(04:33–08:36)

• The COVID pandemic’s impact on labor is unprecedented, with obvious, lasting changes to service and retail industries.
• Notably, recent years have delivered the biggest wage gains to low-wage workers—contrary to decades-old narratives.
• Morgan on post-crisis sentiment:

  “Biggest wage gains in percentage terms by far over the last three or four years have come with the lowest wage workers…” (06:31)

• The pandemic response diverges from previous cycles; the future remains uncertain due to unique economic whiplash.
• Doug:

  “I think we’re just completely here in unexplored territory on the… whipsaw effect of what we had gone through over the last three years.” (07:18)

3. Pessimism and Relative Financial Well-being

(08:36–14:14)

• Even with unemployment at record lows, Americans report gloomier outlooks on their finances, with high credit card debt and malaise.
• Morgan:

  “There’s never been, like, this boom… you’re not going to find large groups of people who say, I feel amazing about my finances most of the time… Everything is relative to other people.” (11:18)

• Social comparisons and economic inequality drive much of this persistent dissatisfaction—it's not about absolute wealth, but relative position.
• Doug explores the difficulty of personal contentment, referencing themes from Morgan’s writing:

  “…After closing a deal and having a good thing and my wife being like, yeah, that’s fantastic. I’m like, no… why are you bummed about that?” (13:13)

• Morgan:

  “Nobody is thinking about you as much as you are… When you realize everyone else is just worried about themselves, then your aspirations to impress other people decrease a little bit.” (15:06)

4. Social Media, Digital Emotion Contagion, & the SVB Crisis

(17:40–34:08, w/ Amit Goldenberg)

a. The Concept of Digital Emotion Contagion

• Amit Goldenberg explains how exposure to emotions online directly influences the emotions we express ourselves, citing a Facebook experiment with 680,000 users:

  “We expose to emotions online… and that not only impacts how we kind of process the world, but also our affective states and the emotions that we tend to express.” (18:18)

b. Negativity Bias and Pessimism’s Power

• Negative content, due to “negativity bias,” is far more engaging and contagious online than positive content—a feature amplified by algorithms.
• Amit:

  “People are… evolutionarily tuned to focus on negative information… this inherent tendency… is now amplified in this world...” (19:50)

• Morgan:

  “Pessimism sounds like somebody trying to help you, but optimism sounds like a sales pitch.” (21:22)

c. Social Media’s Role in the SVB Bank Run

• The clustering of SVB clients—mostly tech entrepreneurs, closely connected online—amplified the panic and speed of the run.
• Amit:

  “In a context in which emotions spread, in this case panic, these clustered communities are much more likely to lead to like a faster spread of emotions.” (22:56)

• The nature of social media caused a “fire in a crowded Twitter thread,” escalating what might have been a contained problem.

d. Historical What-Ifs: Social Media in 2008 or 9/11

• The hosts speculate how crises like the 2008 financial crash or 9/11 would have unfolded with today’s social media:
  • Social media could have accelerated and intensified panic—but might also have magnified collective morale or coordinated solutions.
  • Amit:

    “It accelerates the speed… but… moral outrage could have played a much more interesting role if it was happening with social media content.” (24:31)

  • Morgan:

    “I do think there is a long history of whenever there is a collective event that’s very traumatic, people can bind together…” (29:42)

e. Practical Tips: Guarding Against Digital Emotional Contagion

• Amit advises: Public figures have extra responsibility, since their negative emotions are more likely to be amplified.
• Two possible approaches:
  1. Filtering: Unfollow or block sources of negative emotion.
  2. Transparency: Tools that clearly show the emotional tenor of content to help users make informed choices—but acknowledges that people may seek out negativity regardless.
• Amit:

  “I think the solution is probably a mix of both—some filtering and some information on the content that one is seeing to help people get a little bit more of a balanced diet of emotional content online.” (33:12)

Notable Quotes & Memorable Moments

• Morgan Housel:

  “Extremes lead to extremes… when you’re at a turning point, it can take years for people to actually accept that that’s what’s happening.” (06:54)

• Amit Goldenberg:

  “Public figures need to be even more careful than kind of non-public figures on social media in expressing negative emotions if they don’t want these emotions to spin out of hand.” (31:01)
  “We need to develop tools that would help people filter emotional content and show them only the positive side… but we're not gonna know anything about the world.” (32:31)

• Morgan Housel:

  “Pessimism is hard to look away from because it’s like, oh, there’s a risk I need to respond to. But optimism… it’s just easier to ignore than a threat that might be there.” (21:27)

Timestamps for Key Segments

• Tech Layoffs & Labor Dynamics: 00:37 – 08:36
• Perpetual Pessimism in Finance: 08:36 – 16:05
• Digital Emotion Contagion & SVB: 17:40 – 22:56
• Social Media’s Crisis Acceleration: 22:56 – 27:15
• Historical What-Ifs (2008/9-11 & Social Media): 27:15 – 29:58
• Practical Digital Hygiene Tips: 30:56 – 33:21

Key Takeaways

• Tech layoffs are part of a larger labor cycle, fueled by company psychology, competition, and a whipsaw post-COVID economy.
• Collective pessimism persists even in strong economies. Social comparison is the psychological culprit, amplified by social media’s window into others’ lives.
• Social media is both a tool for connection and a vehicle for rapid panic, groupthink, and emotional contagion—most visible in the SVB bank run.
• Filtering digital content and being mindful of public emotional expression are critical, particularly for influential voices. But ultimately, a blend of awareness, filtering, and self-regulation is necessary—as a “balanced diet” for the mind.
• "No one is thinking about you as much as you are." — a subtle yet freeing reminder from Morgan Housel.

This episode is essential listening for anyone interested in the intersection of finance, psychology, and technology—especially in an era when social media can trigger or avert real-world economic crises in mere hours.