In response to my comment at Greg Mankiw's blog, “Reasonable” asks:

What's the possible advantage of completely removing any remaining discretionary Central bank control over the money supply, compared to establishing a conservative Central Bank committed to following a monetary rule?

My answer: Abolishing the central bank makes the commitment not to inflate/devalue more credible. Friedman’s worry – a reasonable one, I think – is that the central bank won’t in fact be committed to following a monetary rule. I’d grant you that OECD central banks that have adopted inflation targeting have stuck to it surprisingly well, even if not flawlessly. In other countries commitment is more of a problem (for elaboration see this article).

The last case I know of a Central Bank who gave up all control over the money supply was Argentina, and look where that took them. And don't come back and tell me it's that the Argentines didn't follow a 'pure' enough model.

My reading of the Argentine experience is different. The adoption of the convertibility system gave Argentina a longer stretch of decent money than it’s had before or since. But Argentina didn’t in fact give up all control over the money supply – its “currency board” was “unorthodox” in several ways. (On this see Kurt Schuler’s article.). Fundamentally, Argentina retained a central bank with the option to devalue. And the government exercised that option, even though there was no good reason to think it would help – and in fact it didn’t help. Devaluation only pushed the economy deeper into crisis.

We saw similar mass movements in the US in the late 19th century rise up over similar issues (which is arguably why we got a Fed several years later).

The US got a Fed because we had banking panics. We had banking panics because we had a perversely regulated banking system. Contrast Canada: no geographical restrictions on banks, lighter note-issue restrictions, consequently no panics and no clamor for a central bank in the late 19th century.

So what conceivable advantage is there in your scheme (reduce 'inflation' in the US!?) to give up this small degree of discretionary power and risk playing around with politics that severe, other than this starry eyed nostalgia for a 'golden' past?

A more credible commitment to stable money.