How did the U.S. recover from the Great Depression, and what role did Franklin Roosevelt’s New Deal play in its recovery? Popular wisdom is divided on these questions, with liberals claiming that it was only thanks to the New Deal, and Roosevelt’s adoption of Keynesian policies, that the U.S. recovered, and conservatives insisting that the policies of Franklin “Deficit” Roosevelt stood in recovery’s way. The truth fits neither view. Instead, FDR largely ignored Keynes’s advice, including both his call for large-scale deficit spending and his opinion that many New Deal policies, as well as Roosevelt’s anti-business rhetoric, were impeding recovery by frightening businessmen. Real recovery had to await WWII, when New Dealer’s hostility to businessmen gave way to a cozy relationship that set the stage for a postwar investment boom that kept depression at bay despite rapid demobilization and the return of government spending's share of GDP to prewar levels.
George Selgin is a senior fellow and former director of the Center for Monetary and Financial Alternatives at the Cato Institute and Professor Emeritus of Economics at the University of Georgia. He is the author of numerous academic journal articles and books, including The Theory of Free Banking (Rowman & Littlefield, 1988), Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage (University of Michigan Press, 2008), Money: Free and Unfree (The Cato Institute, 2015), Less Than Zero: The Case for a Falling Price Level in a Growing Economy (The Cato Institute, 2018), Floored! How a Misguided Fed Experiment Deepened and Prolonged the Great Recession (The Cato Institute, 2018), and The Menace of Fiscal QE (The Cato Institute, 2019), and False Dawn: The New Deal and the Promise of Recovery, 1933-1947 (University of Chicago Press, 2025).
