> Interesting read, thanks, but so far I don't get the impression that the gold standard features as prominently in the explanations as you claim? To preface t

> Interesting read, thanks, but so far I don't get the impression that the gold standard features as prominently in the explanations as you claim? To preface this, I think a combination of the two mainstream proposals (Keynesian, Monetarist) provide the best explanation, rather than an either/or approach. * https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression#Keynesian https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression... * https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression#Monetarist https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression... The Keynesian and Monetarist explanations are slightly different, but both point fingers at insufficient money supply. But why was the money supply insufficient? Well, because of the gold standard. The federal government would trade dollars for gold at a fixed conversion rate, so the supply of dollars was fixed against the supply of gold that the treasury was holding. As demand for dollars grew faster than the treasury could expand its gold reserves, deflation happened. As banks started to fail the need to keep the money supply proportional to the gold reserves prevented the Federal Reserve from creating money to extend loans to failing banks, touching off waves of failures and economic crisis. And then with the economy stagnated due to demand shocks, business failures, and unemployment, the need to keep the money supply proportional to the gold reserves prevented the Federal Reserve from creating money to loan to the federal government to boost spending. Instead the federal government raised taxes to strengthen government finances, taking even more money out of the economy at a critical time, because it could not originate money without buying gold from somewhere, and nobody was selling, including other countries that themselves needed gold for their gold-backed currencies. (The money shortage was at this point basically global.) It wasn't until FDR suspended redemption of dollars for gold and forced everyone with gold to turn it over to the treasury in exchange for dollars that the money supply could be meaningfully expanded (and then only in proportion to the amount of surrendered gold). Then, with the nation's stock of gold under the control of the treasury and redemptions of dollars for gold suspended, the federal government could go about meaningfully expanding the money supply, which it did by announcing that the value of gold had increased from $20/ounce to $35/ounce, which allowed the federal government to issue 70% more dollars, since the money supply was still actually restricted to the amount of gold held by the treasury. (Though if the government owns all the gold, and doesn't actually allow redemptions of dollars for gold, and gets to set the price of gold, you basically have a fiat currency with additional steps).