Monetary conflation
In the comment sections to various posts, I see lots of ideas being conflated. Here I’d like to separate out some distinction policy questions:
1. Should the value of the medium of account be stabilized in terms of gold or NGDP? Or should its quantity be fixed?
2. Should the monetary system be determined by the government or the private sector?
3. Should banking be regulated, or should we allow free banking?
In my view, these are three completely unrelated questions. Any of the 12 possible combinations are at least theoretically feasible.
I make this point because people will say things that make no sense to me, such as that they oppose NGDP targeting because they favor free banking. Or that they want to abolish the Fed because they favor a gold standard. Huh?
Here are some feasible systems:
The monetary authority (public or private) might do nothing more than define the US dollar as 1/2000 ounces of gold. Or it might define the dollar as 1/20,000,000,000,000th of NGDP, as measured by an NGDP futures contract. Or it might fix the monetary base at a constant level. None of those options are any more libertarian than the other two. In each case, you either artificially fix the value of the dollar or you artificially fix the quantity of dollars.
Any of those three systems could in principle be done by either the government or the private sector. So that makes six possible combinations.
And for each of those six possible combinations, you could either regulate the banking system (our current system), or allow a completely unregulated free banking system, even allowing banks to issue banknotes to be used as currency.
FWIW, my own preference is to have NGDP targeting, done by the government, combined with a 100% unregulated free banking system. But even if you don’t agree with me, try to keep the issues separate. The role of the government in monetary policy is one thing. The price or quantity of the medium of account is another thing. And the status of commercial banking regulation is a third thing.