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The Gold Standard Didn't Create the Great Depression, the Federal Reserve Did

• https://fee.org, Germinal G. Van

Today, conventional discourse leads us to believe that the Great Depression was created by a failure of laissez-faire economics—by a failure of the free market and an unregulated economy. This is the narrative that has been constructed and is now perpetuated in all classes of political science and history taught to students.

The Great Depression

Many intellectuals and economists have furthered this narrative by asserting that the gold standard was the real cause of the market failure, thus government intervention was consequently legitimate to rescue the economy. This is a myth that must be debunked before it polarizes forthcoming generations. As Dr. Murray Rothbard, who was a strong proponent of laissez-faire economics, once famously said of the Great Depression:

What was the trouble? Economic theory demonstrates that only governmental inflation can generate a boom-and-bust cycle and that the depression will be prolonged and aggravated by inflationist and other interventionary measures. In contrast to the myth of laissez-faire, we have shown in this book how government intervention generated the unsound boom of the 1920s, and how Hoover's new departure aggravated the Great Depression by massive measures of interference.

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