I should really be sleeping but George Selign just put out a blog post on Free Banking and NGDP Targeting.
This is how George kicks off:
“Kurt’s recent post on NGDP targeting just happens to come right on time to introduce one I’d been contemplating concerning the connection between such targeting and free banking. While many readers may suppose the two things to represent entirely distinct, if not antagonistic, approaches to monetary reform, I have always regarded them as complementary. Yet I also agree with Kurt in regarding NGDP targeting as “a form of central economic planning.”
Am I contradicting myself? Much as I’d like to quote Walt Whitman, I don’t think I am. Instead, I think that it is those who would insist on the incompatibility of free banking and NGDP targeting whose reasoning is faulty. They fall victim, I believe, to a category error, namely, that of conflating banking regimes with base money regimes.”
Read the rest here.
Bedtime for me…
PS please read this as well.
The Market Monetarist 
W. Peden
/ June 20, 2013Fascinating stuff. As someone who is suspicious of central banking and also in favour of NGDP targeting as one of the least bad ways to run a central bank, I find myself broadly in agreement with what Selgin and Schuler say.
I disagree with what Kurt Schuler seems to say on one point, though-
“In the late 1980s and the 1990s a wave of enthusiasm for inflation targeting swept through economists and policy makers. Inflation targeting was supposed to be superior to what had come before it.”
It was: compared to exchange-rate targeting (e.g. the UK from about the late-80s to 1992) or “choose-your-own-aggregate” pseudo-monetarism (e.g. the UK from 1976 to the mid-80s) inflation targeting was a great improvement. Apart from (arguably) currency boards, they’ve been the best game in town over the past 20 years. Similarly, monetarism (both when it was practiced reasonably firmly in Germany and Switzerland and even when it was used primarily for gamesmanship as in the UK and Canada) was an improvement on what can be broadly called Keynesianism.
It’s just that NGDP targeting is so much better.
W. Peden
/ June 20, 2013I particularly like Selgin’s distinction between banking regimes and base money regimes.