In the comment section of various posts, I see a lot of ideas coming together. Here I would like to distinguish some difference policy questions:

1. Should the value of medium of account be stable in terms of gold or NGDP? Or should the amount be fixed?

2. Should the financial 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 three are completely unrelated questions. Any of the 12 possible combinations is at least theoretically possible.

I say this because people will say things that make no sense to me, like they oppose targeting NGDP because they are in favor of free banking. Or they want to abolish the Fed because they support a gold standard. Huh?

Here are some possible systems:

Monetary authorities (public or private) can do nothing but define the US dollar as 1/2000 of an ounce of gold. Or it could define the dollar as 1/20,000,000,000,000th of NGDP, as measured by an NGDP futures contract. Or it can fix the monetary base at a constant level. Neither of these options is more libertarian than the other two. In each case, you either artificially fix the dollar value or you artificially fix the dollar amount.

Any of these three arrangements can in principle be undertaken by the government or the private sector. So that makes 6 possible combinations.

And for each of these six possible combinations, you can either regulate the banking system (our current system), or allow a completely unregulated free banking system, even allowing banks to issue banknotes as currency.

FWIW, my own preference is NGDP targeting, done by the government, combined with a 100% unregulated free banking system. But try to keep the issues separate even if you disagree with me. The role of government in monetary policy is one issue. The price or quantity of the medium of calculation is another thing. And the status of commercial banking regulation is a third thing.

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