Free Banking

Here's something interesting.

Free Banking would be something opposite to what we have today. Free banking would allow banks to print/mint their own money, make their own rules about money management and would be independent of government control or a lot fewer controls that what we have today.  I have read more on this! Apparently there have been periods in America's past where we had such a system, this is good because if the Federal Reserve were to go away, then how would you explain how banking works? What if there were a run on the banks? How should they react without hurting the customer?

I think most liberals and conservatives agree that monopolies are counterproductive to a free society. Monopolies stifle innovation, inflate prices, and generally create worse consumer experience. It's like this because there is no motivation, no incentive to keep improving or offering better customer service or competitive prices. If we all agree that this is true, then why do we allow the government a monopoly on money, police, fire, national defense, practically anything that can be done better and cheaper by the private sector?

If we had competing currencies then you'd have items priced in several currencies. It would be in the interest of the bank issuing the currency to maintain good customer relations, maintain a relatively stable value - never deflating or inflating too much. Currently, government controlled currencies are subject to the whims of political pressures and as we can see the dollar has lost more than 95% of its value since the Federal Reserve took over in 1913. Comparatively, the dollar inflated only 10% from 1776 to 1913. The reason why governments like non-commodity based currencies, i.e. fiat money, is that they can print as much as they desire to wage wars or offer welfare programs to the people. This also allows politicians to slowly devalue the money without imposing unpopular taxes. A free banking system wouldn't allow this because of competition with other banks, so they must keep the customer (currency holder) happy.