“Irwin argues that France systematically accumulated large amounts of gold in the late 1920s and 1930s, imposing massive deflation on the rest of the world. Drawing on a recent paper of his, Irwin argues that France’s role in worldwide deflation was greater than that of the United States and played a significant role in the economic contraction that followed.”
I know Robert Murphy deals with this in his Great Depression book. I just looked at Amazon—it’s in chapter 4. Sorry, I haven’t read the book so I can’t comment on the argument. I’ve heard it before, and was convinced by it.
What bothered me the most about this podcast was the core basis for Irwin’s paper:
" This conclusion is supported by two compelling observations: countries not on the gold standard managed to avoid the Great Depression almost entirely, while countries on the gold standard did not begin to recover until after they left it."
The host did not ask him to qualify what data was being used to make that assertion. Specifically, how they determined who was in a “depression” and who was not. Irwin’s paper does not actually address this issue, but references a few other papers that make this assertion. I can think of a simple scenario that would explode his whole idea:
All countries are basically in a depression and real prices fall
Those countries with fiat currencies inflate and manage to keep nominal prices stable
Therefore, researchers determine that those countries with fiat currencies were not in a depression
Therefore, Irwin asserts that the gold standard leads to depression (correlation is causation)