In the forty-sixth chapter, The Machinery of Freedom, David Friedman analyzes the idea of private money, free banking, and all that sort of thing, which in the eighties of the last century seemed much more distant and less feasible than it does now.

The main part of the chapter, The Money Market, is an exposition of the concept of private money itself. I haven’t read Hayek’s work of the same name yet, but it seems that Friedman based much of his work on it. The author analyzes why state maintenance of the monetary system will always perform poorly, and why there are no problems with private entities handling it.

The first additional subsection, Which Commodity Exactly?, concerns the question of which specific commodity the monetary system should be based on in the Wonderful America of the Future. Friedman suggests using a basket of exchange-traded commodities, the price of which would correlate as closely as possible with the level of consumer prices. In short, the boomer invented the stablecoin. Modern mechanisms allow for the easy issuance of tokens pegged to any commodity basket, but practice shows that tokens pegged one-to-one to the banal fiat dollar are the most popular.

The second additional subsection, Preference Is Not a Prediction, contains the author’s complaints that the system he invented is beautiful but unattainable, and that private money would more likely be pegged to gold—the inelastic supply of which, for some reason, Friedman views as a tragedy—but certainly not to a consumer price index.