During the Depression(the Great one), Britain went of the gold standard. The result, according to Wikipedia laid the ground for economic recovery. How do Austrian economists explane this?
As i understand is this one of the arguments Keynesians have for abolishing the gold standard.
I can also see that the article mentiones that a deflation following following wage cuts and unemployment benefit cuts caused bad purchasing power(?)
I am not positive on the timeline, but I think before they went off the gold standard they first restored it and pegged the value to what it was before the earlier intervention. Essentially they set the ratio wrong and it caused all kinds of problems. Once the decoupling happened it would give the illusion that the new fiat system “fixed” the problem.
Correlation does not equal causation. My guess would be that the market crash was in response to a market problem, as usual. Once the problem was resolved the market recovered on it’s own. I believe it’s likely the depression would have been resolved without any intervention and likely in a better way.