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Stability of currency induced by proper adherence to a gold standard or a true "free-banking" system would reduce the boom-bust cycle by preventing wild fluctuations in money supply.

It didn't in the United States prior to the formation of the Federal Reserve. In fact, the Federal Reserve was formed to halt the "boom-panic" cycle. It actually has done a fair job of just that, although it does indeed look like it is about to encounter its greatest test.
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