Hayek’s Constancy of Nominal Spending Rule (Keep MV Constant) Made Him Doubt the Merits of the Gold Standard and Free Banking

Hayek noted that a hypothetical gold monetary system in which the money stock consisted exclusively of gold coins (without bank-issued money) would poorly approximate his norm because the stock of monetary gold would not adjust promptly to offset changes in velocity. Gold accumulated slowly from additional mining following a rise in the relative price of gold. Nor would a system with bank-issued money approximate it well, he thought, unless a central bank existed to promptly offset any changes in the volume of bank-issued money not warranted by velocity changes. Thus Hayek was more ambivalent than Mises regarding the merits of the gold standard and free banking. 

—Lawrence H. White, “The Roaring Twenties and Austrian Business Cycle Theory,” in The Clash of Economic Ideas: The Great Policy Debates and Experiments of the Last Hundred Years (New York: Cambridge University Press, 2012), 83-84.