I made reference to Tony Evans in my post from last night not because Tony is the author of the Cobden Centre proposal, but because he has thought seriously about these issues. George in reply seemed to think my reference implied that Tony wrote the proposal.
To the best of my knowledge, the author is Toby Baxendale and that Toby has derived his position through years of self-study, and reflection on his business practice, and in spirited conversations with Tony, Kevin Dowd, Jesus Huerta deSoto, and many others (including myself). I don't know if he has talked at length with Steve, George or Larry personally. From my experience, I know that Toby would love to have a spirited discussion with them as well.
Tony has written his own paper reflecting his meditations on free banking --- Tony argues that banks can be free, fractional, and solvent. So Tony comes down closer to the Horwitz, Selgin, and White position.
As my post should have indicated, I am neither trying to stir up controversy where none is needed, nor am I saying this side or that side is obviously correct. I honestly do not know enough monetary theory and history to pass a professionally competent judgement in the field of monetary economics. My priors lead me to think of the Horwitz, Selgin, and White position with respect to economic theory, but the political economists in me think they don't deal enough with the "from here to there" transition question.
NGDP targeting does not seem to deal with the administrative problems that Friedman came to recognize with the K% rule (or any rule for that matter). There is a reason why Hayek eventually came to the position he did on the denationalization of money. It does seem weird that I am chiding the very people who have pursued Hayek's ideas on this more than any others to take Hayek's ideas even more seriously as a solution to our problems in a time of crisis.
So I remain puzzled and asking questions. I am thinking aloud, which is always dangerous because it by necessity reveals half-baked and poorly thought out streams of consciousness. But I am genuinely confused. What is so wrong with getting banks to operate based on the ordinary principles of property, contract and commerce? Does the Baxendale proposal go beyond that simple suggestion to propose something deeper? It seems as if Horwitz, Selgin and White believe so. Why don't I share that same assessment? I must be intellectual "blinded" somehow that I don't understand, so I will try to re-read and re-think. But what we must not do in these discussions is confuse a theoretical point with a market prediction, and confuse a point of morality with issues associated with positive economic analysis. I am wondering if the way Baxendale is trying to frame the policy debate for sound and honest money isn't correctly staying in the realm of theory (rather than market prediction) and on point in positive economics (rather than moral theory). Baxendale does have moral outrage --- but don't all broadly speaking free market economists at the current status of privileged banks under a government monopoly supplier and protected through the power of the tax state.
Selgin has responded to the legal and economic history claims about the origins of fractional reserve banking in a working paper. He finds the arguments about the principles of property, contract and commerce used by critics of fractional reserve banking to be theoretically unpersuasive and factually incorrect. But I, for whatever imperfect and perhaps confused reason, believe that I can agree with Selgin and still think the Baxendale proposal works to push for banks to be subject to the ordinary principles of property, contract and commerce and to allow the market mechanism scope for experimentation with a variety of contractual relationships between banks and their customers subject only to the self-regulation of the market through profit and loss.
If you look at the comment sections for this post and also my earlier post, then you will discover that it appears that I may have misrepresented significant details in the Baxendale plan. I said from the beginning of my posts that I may be guilty of this and was thinking aloud on the general topic to try to think through it and learn from others. But I will remain quiet for now until I actually study the proposal in depth and I do apologize to all for any confusion I might have perpetuated. The bottom line is, I am in great sympathy with any effort to rein in the monetary authority and return to a regime of honest and sound money and banking. It is that simple --- we need to think creatively about how to get a regime of fiscal responsibility and sound money. It is my prior that this can only result from a radical rethinking of both the scope and scale of government and the elimination of state monopoly control over money. Radical fiscal federalism coupled with free banking would be my preferred policy agenda. But any step in that direction whatsoever is a step in the right direction in my opinion, and any step away is taking us further away from fiscal responsibility and sound money. Such statements as this are too vague to be of much use in the world of practical policy. But hopefully such general principles can serve as a guide for more concrete policy proposals which can have a practical effect.