Absolutely that is what 100% reserve people don't understand.
The money supply under the gold standard was highly flexible.
Banks depending on demand (or velocity) automatically raised or lowered their reserves.
Meaning that if velocity is slow, banks would automatically lend more and create stable monetary conditions. Basically what central banks now do by having a bunch of burocrates look at statistics.
The money derives its value from something central (wether it's the gold holdings of the country or the printing press) rather than being decentralized.
