Macro Musings with David Beckworth · Mercatus Center at George Mason University

George Selgin on Contextualizing the Great Depression and its Implications on Monetary Policy Today

June 2, 2025·1 hr 13 min·7 clips

George Selgin explains why the New Deal didn't end the Great Depression, despite popular belief.

This episode of Macro Musings features economist and historian George Selgin discussing his new book, *False Dawn*, which analyzes the New Deal's role in the U.S. recovery from the Great Depression. Host David Beckworth, a Senior Research Fellow at the Mercatus Center, engages Selgin on the specific economic policies and historical myths surrounding this period. Selgin, a Senior Fellow at the Cato Institute, aims to provide a nuanced assessment distinct from conventional narratives. The conversation examines whether New Deal programs like the National Recovery Administration (NRA) actually aided recovery or prolonged economic distress. Selgin details the international gold exchange standard's collapse as a key cause of the Depression, highlighting France's role in hoarding gold. He evaluates specific policies, placing the suspension of the gold standard and the 1933 bank holiday—planned largely by Hoover's team—in a "positive" bucket for enabling recovery. Selgin also praises the Home Owners' Loan Corporation (HOLC) for successfully refinancing mortgages to counteract debt deflation. Conversely, he argues the Reconstruction Finance Corporation (RFC) largely failed to stimulate recovery before World War II, and criticizes the NRA's cartel-style codes for being ineffective. A surprising claim is that Franklin D. Roosevelt initially opposed federal deposit insurance, which passed despite his stance. Selgin notes that measured unemployment remained at 17.3% in 1939, indicating the New Deal did not achieve a full recovery. He challenges the myth that World War II spending alone ended the Depression, arguing the war's conclusion was the true test for sustained recovery. The discussion references economic historians like Doug Irwin and research on the French gold hoarding's global impact. Selgin also clarifies that Roosevelt's gold purchase program, based on George Warren's theory, was less effective than a straightforward devaluation would have been. The tone is educational and conversational, with Beckworth and Selgin exploring complex economic history in an accessible, detail-oriented manner. They structure the dialogue around evaluating policy "buckets" and debunking persistent myths. Listeners interested in monetary history, the Great Depression's causes, and critical analyses of New Deal economics will find this episode compelling. Those seeking a broad, non-technical overview of the era or an uncritical celebration of New Deal policies might prefer other content.

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George Selgin revisits the Great Depression through the New Deal, the gold standard, and the banking holiday.

George Selgin's conversation with David Beckworth treats the Great Depression as a policy story shaped by the New Deal, the gold standard bind, and the banking holiday.

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Trace the Great Depression's monetary turns with George Selgin on False Dawn and the New Deal.

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