I'm looking at this image which implies that the US leaving the Gold Standard started revival after the Great Depression. I'm thinking that it could all be explained with rapid inflation due to the dollar not being linked to gold. Am I off on this?

1 Answer 1


I discussed this exact action in a fair bit of detail in my answer to Gold Confiscation Act of 1933 . You may want to go check that out.

To bring that answer full circle, taking the USA off the Gold Standard wasn't the only economic system change the US government made at that time. The Gold Confiscation Act had the effect of propping up the money supply. If you are a Monetarist, you might want to argue that this was the one action that turned the economy around. On the other hand, the government also went on a spending spree in an attempt to jump-start the economy. If you incline towards Keynesian Economics, you might prefer to tout that as the action that turned things around.

If you are instead a Software Engineer accustomed to debugging programs (such as myself), you perhaps would instead point out that if you change multiple variables at once, there is really no way of knowing which one fixed the "bug".

  • Great points but if the inflation rate mimics the rate of growth in that graph then it would be justifiable to say that the data in the graph is misleading. Which will help me better argue a point in a paper I'm working on.
    – David
    Commented Mar 5, 2013 at 2:07
  • @David - I should hope they put that graph in "real dollars/pounds/francs/whatever", or its pretty damn misleading.
    – T.E.D.
    Commented Mar 5, 2013 at 2:12
  • Well I looked into it a bit more and found a way for my point to stand either way but thanks for the help on both questions
    – David
    Commented Mar 5, 2013 at 2:15
  • Or, if you're used to debunking fake medicine claims on skeptics, you might note that the economic revival may have simply naturally happened because things have hit the bottom, and revival would have happened indepenently of any claimed reasons. Causality is pretty hard to establish when you dataset is of size 1. +1 for the last paragraph.
    – DVK
    Commented Mar 5, 2013 at 14:57

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