Krugman had no substantive responses to Ron Paul’s arguments. He stated from the outset that he took it for granted that the Federal Reserve should be in charge of monetary policy, dismissing Ron Paul’s arguments as left overs from the world of a 150 years ago. When Dr. Paul correctly retorted that Krugman’s arguments have their roots in the government debasement of coins, which has been happening for thousands of years, Krugman scoffed at talking about ancient history. Even though he brought it up. “I am not a supporter of the economic policies of Emperor Diocletian,” he told us. (Though he later followed up on his blog, after bragging about that oh-so-witty response, that “we really don’t know what happened” during the Diocletian era. So maybe he is a supporter of Diocletian after all).
Krugman argued–or rather, asserted–that the 1950′s represented a golden age of government management of the economy. He never responded to Ron Paul’s argument that the postwar era reveals Keynesianism as the fraud it is since the massive decrease in government spending after the war did not lead to a depression, as the Keynesians of the time predicted so confidently.
Bringing up Milton Friedman is the only thing I don’t think Dr. Paul should have done. Friedman was terrible on monetary policy, and while Paul knows this and was making a valid point, bringing him up gave Krugman the opportunity to use his “even Milton Friedman would think you are crazy” routine.