Just In Case You Think Megan McArdle Understands Free Market Banking...

She doesn't. She writes in her Bloomberg column:

The other evening, I was interviewed by the charming David von Drehle for an event at the Kansas City Public Library. He noted that I had jeopardized my libertarian card by supporting the bank bailouts, a position that I still hold.

I mean she has no clue. She doesn't understand that, in a free market banking system, banks would have to take serious the difference between demand deposits and time deposits. Something they don't have to do now because of the Federal Reserve control of the banking system. Thus, what she writes has no application to a free market banking system, though it appears that she believes it does:

The fundamental fact of a banking crisis, which is different from a crisis in any other industry, is that if people believe a financial institution to be bankrupt, it actually is bankrupt.

Then, she really goes off the rails with this:

So why not build a banking system where this can’t happen? Well, alright. How shall we do that? Are we going to forbid the structure of modern banks (“fractional reserve banking,” for those who are interested in the technical term) 

Leave aside the irony that outlawing a practice engaged in by millions of upstanding Americans is not, at first blush, a particularly libertarian solution.

Where does she get the idea that "outlawing a practice engaged in by millions of upstanding Americans is not, at first blush, a particularly libertarian solution"?  The idea is not to prevent individuals from participating in any free market transactions they chose but to eliminate the Fed from maintaining monopoly control over the banking sector and money creation. Nothing none libertarian about that.