[neffy]

Not actually the case. The gold standard linked the expansion of the money supply to the price of gold, not the actual supply. So as the money supply expanded, every time gold was bought or sold through direct bank transfer, the price was influenced by the expanding deposit supply, not by the asset gold supply, and slowly increased, creating a nice little feedback loop. If you look at the figures for the gold standard period in the 19th-20th century, otherwise known as the British Monetary Orthodoxy, you will see a slow and steady expansion in the deposit supply in all countries using it. Trouble was, the expansion was a different rates in different countries, and so by the 1910´s the differences were tearing the invisible financial fabric apart. The rest as they say is history.

Banking systems being somewhat unstable and prone to credit crises is actually an entirely different problem, and unrelated to how the expansion is being regulated.