I just came across this nice little piece by Alvaro Vargas Llosa in The New Republic. Vargas Llosa uses the Liberty Dollar raid to ask why we need a central bank in the first place. The comments are pretty vigorous, with what appear to be a good number of Ron Paul supporters who know enough about Austrian monetary writings to be dangerous.
The biggest confusion among the commenters is not distinguishing between "free banking" and a 100% reserve gold standard. Some of those defending getting rid of the Fed make the usual weak arguments that "any supply of money is sufficient" as long as prices are free to move. As I've asked before, why doesn't that mean inflation is harmless? If we can't have too little money because prices can always "just" adjust downward, how is it that we can have too much if prices will always "just" adjust upward in a free economy?
The other confusion is blaming Vargas Llosa for being inconsistent in arguing that inflation was responsible for the crash in 1929 but that the Fed's allowing the money supply to fall dramatically in the early 30s was responsible for turning a crash into an extended depression. That's not inconsistent if you approach it with a monetary equilibrium perspective where the goal is to keep the supply of money equal to the demand to hold it at the current price level. In that view, not all expansions of the money supply are inflationary, and especially not when the supply has fallen 30% in a few short years, requiring a reflation. Such a view is compatible with inflation in the 1920s causing the crash and deflation in the 30s making it worse.
In any case, it's good to see a moderate-to-liberal magazine like The New Republic take up this issue. As I recently argued, the left ought to take the critique of central banking more seriously.