by Frank Shostak
Mises.org
According to the Austrian business cycle theory (ABCT), the boom-bust cycle emerges in response to a deviation in the market interest rate from the natural interest rate, or the equilibrium interest rate. It is held that the major cause for this deviation is increases in the money supply. Based on this it would appear that on a gold standard without the central bank, an increase in the supply of gold will set in motion boom-bust cycle.
An increase in the supply of gold is likely to result in the lowering of market interest rates. This in turn is likely to cause the market interest rates to deviate from the equilibrium interest rate. Consequently, following the ABCT, an increase in the supply of gold is going to set in motion the boom-bust cycle.
According to Robert P. Murphy, Ludwig von Mises held that an increase in the supply of gold could trigger the boom-bust cycle.