Although he felt he had some reason for belief in telepathy, and privately ascribed a Viennese medium with "a powerful physiognomic gift," Sigmund Freud at first distanced himself from occult practices to prevent psychoanalysis from being associated with fakes and quackery. Later he was confident enough in his personal belief that he told Ernest Jones airily, "If anyone should bring up my Fall with you just answer calmly that my acceptance of telepathy is my own affair, like my Judaism and my passion for smoking." In his biography of Freud, Ernest Jones ascribed Freud's "exquisite oscillation" on occultism to the seeking and theorizing of a genius.
The story of the exchange with Jones has also been discussed by Jacques Derrida in his essay "Telepathy." Derrida sees the occult as an instance of liminal anxiety, psychoanalysis "set on swallowing and simultaneously rejecting the foreign body named Telepathy, for assimilating and vomiting it without being able to make up its mind to do one or the other."
It has been said that the primary psychoanalytic concept of "transference" would not be possible without the prior theorization of telepathy. Transference, like the dead, operates as a haunting return: the "stereotype plates" of first love turn everyone who comes after ghostly: "All my friends have in a certain sense been reincarnations of this first figure ... : they have been revenants," said Freud in "The Dynamics of Transferrence."
According to Helene Deutsch, it is the analytic interaction in which transference and telepathy comingle. In 1926, Helene Deutsch published "Occult Processes Occurring During Psychoanalysis," which suggested that "during Psychoanalysis the psychic contact between analyst and analysand is so intimate, and the psychic processes which unfold themselves in that situation are so manifold, that the analytic situation may very well include all conditions which facilitate the occurrence of such phenomena."
Ferenczi's essay "Confusion of Tongues between Adults and the Child" gave the traumatized patient an "uncanny clairvoyance." This theme also ran through Ferenczi's Clinical Diary, and in a fragment on the theme of being dead, Ferenczi elucidated his view that in the moment of the trauma some sort of omniscience about the world ... makes the person in question ... more or less clairvoyant. Ferenczi suggests his patients are the living dead, touched by occult powers unleashed by the "little death" of trauma. This telepathic aura around transferential relations remains a topic of discussion in the psychoanalytic community to the present day.