Those of us interested in market process and macroeconomic problems need to consider the full extent of the problems which we study. If I or anyone else promotes a free market monetary system, we cannot simply rely on the systems theoretical superiority to win the day. We need to consider improvements to the current system that can be made. As long as the government continues to promote a legal tender monopoly, bright minds should consider how to make that standard as little damaging as possible. In addition to those made in this post, I have suggested a number of other reforms including the elimination of capital gains taxes and of regulations that inhibit liquidity. If we are stuck with a legal tender monopoly, a monetary base constrained by a predictable rule is probably the best policy possible. Hayek appears to have come to grips with this once he stopped defending the international gold standard (both the classical gold and gold exchange standards were managed standards; see Hayek 1943 and 1960 about rules and predictability). It is time that market process theorists consider how an nth best policy might do the least harm or even promote development. In doing so, we must also make clear that we are suggesting an nth best solution, not a road to Utopia.
