Regular readers may recollect Philipp Bagus and David Howden’s recent publication in the QJAE, where they provide a critique of fractional reserve free banking. They place particular emphasis on the work of George Selgin, and he has responded with “Mere Quibbles: Bagus and Howden’s Critique of The Theory of Free Banking“.
Steve Horwitz and I have also written a response, touching some of the same ground as George but intending to focus on different points. Here is the abstract:
In their recent article in the Quarterly Journal of Austrian Economics, Bagus and Howden (2010) present “quibbles” with fractional reserve free banking. Or specifically, what they call “unaddressed issues” in this system, with a particular emphasis on Selgin (1988). We deem their arguments to be more substantial than “quibbles” and are part of a longstanding debate about fundamental aspects of monetary theory. We respond to their objections and attempt to specify how debate between the two sides might proceed more productively.
It’s called “An Appeal for Better Scholarly Discourse: How Bagus and Howden Have it Wrong on Free Banking“, and can be downloaded here.