Ezra Klein has a post arguing that Hitler and FDR ended the Depression (h/t RCM):
The two policies … key to the recovery were FDR’s decision to sign Executive Order 6102 and Hitler’s decision to overrun Europe.
Executive Order 6102 sounds pretty bizarre when you explain it. Remember that in the 1930s, dollars were backed by gold. Your dollar was worth what it was worth because the American government was committed to giving you a certain amount of gold in exchange for it. In Executive Order 6102, FDR forced every American to turn in almost all of their gold at a price of about $20 an ounce. Then he said that gold would stop being worth $20 per ounce and begin being worth $33 an ounce. This meant a massive devaluation in the dollar, which sounds bad, but actually meant a huge stimulus: our exports became cheaper and more popular, which in turn meant we created jobs because we needed more people to manufacture stuff that we could export.
As for Hitler, the more he did to threaten Europe, the more Europeans did to safeguard their money in the event of a Nazi invasion. That meant investing in American stocks and bonds, which expanded the amount of money in our economy, which lowered interest rates and increased expectations for future inflation (and eased fears of coming deflation), and gave consumers and businesses reasons to invest.
The post is interesting and worth reading in full.
Ezra says this interpretation of how the U.S. got out of the Depression is shared by conservative/libertarian economists including Greg Mankiw and to some extent Milton Friedman.
I’m pretty sure Friedman did not share this view. Regardless, the efforts to give FDR credit for rescuing the nation from the Depression would be more persuasive if they at least addressed Robert Higgs’s powerful essay on why the Depression lasted as long as it did and Roosevelt’s role in prolonging the Depression. I’m not saying Higgs has everything exactly right, but he strongly undercuts the case that FDR got the nation out of Depression.
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