Monday afternoon, economics nerds and libertarian Paul fanatics got the dream showdown they’ve been waiting for: Congressman Ron Paul versus Paul Krugman (“Paul vs. Paul”) on Bloomberg TV’s Street Smart. Co-host Trish Regan billed it as a battle between Rep. Paul, “a pioneer of fiscal conservatism, the face of debt reduction and small government, a hero of the Tea Party” versus Krugman, “a spokesman for activist government, a believer in deficit spending, and this generation’s choice for economic the liberalism.”
In the minds of libertarian economics geeks everywhere, I’m sure this battle looks something more like this:
Back in reality, however, Rep. Paul spent a great deal of time railing on Krugman’s economic ideology and the Federal Reserve’s monetary policy of manipulating interest rates. He called for an end to our current monetary policy as we know it:
I don’t want the government or the Federal Reserve fixing the rate of interest — that’s a price fixing. And wage and price controls never work, and so pricing the cost of money does not work either. This idea that somebody or some group might know what the proper amount of money might be or what the proper rate of interest should be is sort of presumptuous. I don’t know where they get this knowledge. Hayek called it the pretense of knowledge. They pretend they know, but they really don’t. But when we talk about electing a president or a Congress to run the economy better, they’re missing the whole point. Governments aren’t supposed to run the economy; the people are.
Krugman, grinning through Rep. Paul’s answers, responded that “if you think you can avoid [the government setting monetary policy], you’re living in the world that was 150 years ago.” Predictably, Krugman continued on to defend our monetary policy as a response to “free market economy gone amok,” and explain why he thinks government is necessary in order to prevent future depressions.
When discussing the topic of inflation (something Krugman wants more of), Rep. Paul hit back that “[Krugman] wants to go back 1,000 years” to the Greco-Roman times when inflationary monetary policy was a common practice. Paul explains how the Roman empire eventually destroyed their currency through inflation, implying that Krugman’s desire for the federal government to print more money could lead to similar consequences.
Krugman chuckled and responded: “I am not a defender of the economic policies of the emperor Diocletian. So let’s just make that clear.”
“Well, you are. That’s exactly what you’re defending,” Paul insisted.
When co-host Trish Regan questioned Paul on whether he wants to abolish the Federal Reserve entirely, he explained that he wants to legalize private currencies to compete with the government monopoly on currency. As it stands today, if people use a private currency, they can go to to jail (as we saw several years ago with the federal raid on the Paul-inspired Liberty Dollar).
Krugman, basically summarizing his general view of Ron Paul’s perspective, responded: “that seems like a strange point of view.”
Check out the Paul vs. Paul battle below, via Bloomberg:
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