When people react out of fear, they tend to react without thinking. They do not clearly think through the consequences of their actions. Instead, they just go with their gut reaction. This can at times be very bad.
From the way you've tagged this, I assume you are talking about the Depression. When people reacted out of fear in that era, it wrecked our economy. The people, for example, rushed to their banks and tried to draw out all of their money. This caused the banks to collapse and that made things worse than they had to be.
So when we panic, we act without thinking and we do things that can hurt us worse than more reasoned actions would.