When historians look back at 2008–10, what will puzzle them most, I believe, is the strange triumph of failed ideas. Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.Krugman takes aim at Ron Paul, who is set to chair the congressional subcommittee that oversees the Fed. Krugman asks,
How did that happen? How, after runaway banks brought the economy to its knees, did we end up with Ron Paul, who says "I don't think we need regulators," about to take over a key House panel overseeing the Fed?Krugman is not asking a serious question, but we can take him seriously for a moment. How did that happen?
The short answer is: By popular demand.
It happened because of growing distrust of the big banks and of the government that allowed them to be bailed out at the expense of taxpayers and dollar holders. It happened because many people have read Ron Paul's End the Fed and the countless articles he's written on money and banking, and have concluded he not only understands the issues, but has the political will to make things right. It happened because people are starting to accept the truth that central banking is a counterfeiting racket that benefits government and privileged insiders at the expense of the rest of us. It happened because people are sick of deficits and unsound money, which are inflating the power of the state over our lives, destroying what's left of the republic, and threatening to bring about a complete economic collapse. It happened because people are taking an interest in monetary issues for the first time since the Great Depression. And this time, they're not going to be suckered into accepting the notion that gold is our enemy and an elastic currency our savior.
For a more balanced assessment of Krugman's column, see Robert P. Murphy's article, "Rise of the Free-Market Zombies."