Ron Paul and Paul Krugman, the battle of the Paul’s, occurred recently on Bloomberg TV. The two men attacked each other about whose views on monetary policy are older than the others. Ron Paul fired the first salvo, claiming that the Federal Reserve’s idea of determining the proper interest rate is presumptuous. Krugman replied by accusing Paul of living in a fantasy world.
“You can’t leave the government out of monetary policy,” Krugman said. The two were having a debate that was called ‘Paul vs. Paul.’ “If you think that you can avoid that you’re living in the world that was 150 years ago.”
Paul then told Krugman some interesting things about the world Krugman is living in:
“He wants to go back 1,000 years or 2,000 years, just as the Romans and the Greeks or others debased their currency,” Paul said.
Krugman quipped right back at Paul with the following: “I am not a defender of the economic policies of Diocletian.” His response was in reference to the emperor of Rome.
The country’s first central bank was created in the late 1700s by U.S. policy makers but the bank, known as the Federal Reserve system, did not stick until 1912. Paul has backed the idea of returning the country to the gold standard, which would be a monetary system, which operates by putting the value of currency at the value of gold. This would limit the role the Fed plays.