Macro Musings with David Beckworth George Selgin on Contextualizing the Great Depression and its Implications on Monetary Policy Today
Jun 2, 2025
George Selgin, a senior fellow at the Cato Institute and author of *False Dawn*, delves into the intricate history of the Great Depression and its monetary implications today. He questions common beliefs about the New Deal, revealing its limited effectiveness in economic recovery. Selgin also discusses the gold standard's restrictive role during the Depression and critiques the Reconstruction Finance Corporation and the National Recovery Administration's mixed impact on revitalization. His insights highlight valuable lessons that resonate with current macroeconomic challenges.
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New Deal's Mixed Recovery Impact
- The New Deal did not end the Great Depression, challenging common myths.
- Its policies had mixed effects, with some helping recovery and others hindering it significantly.
Unemployment Depth in Great Depression
- The Great Depression peaked with 25% unemployment including work relief, still 17% in 1939.
- Relief jobs were not substitutes for private-sector employment, highlighting the slow recovery's depth.
Gold Exchange System's Fragility
- The interwar gold exchange standard created global monetary fragility by requiring cooperation and allowing some countries to hoard gold.
- France's gold hoarding precipitated the system's collapse, worsening deflation and the Depression's depth.