During the "debate" on Bloomberg television between Congresman Paul and Krugman, Krugman said:
You can't leave the government out of monetary policy.If you think that you can avoid that you're living in the world that was 150 years ago.Well, two can play that game and Dr. Paul responded by taking Krugman back centuries: "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.
You know someone has really gotten demolished in a debate when they immediately rush to their blog to "set things straight" after the debate. Krugman rushed to his blog and had this to say:
Don’t Know Much About (Ancient) HistoryIn other words, that Ron Paul punch still stings Krugman. As for the details that Krugman may not know, what happened in the Diocletian era is pretty much common knowledge to well read economists.
The things I do for book sales. I debated, sort of, Ron Paul on Bloomberg.Video here. I thought we might have a discussion of why the runaway inflation he and his allies keep predicting keeps not happening. But no, he insisted (if I understood him correctly) that currency debasement and price controls destroyed the Roman Empire. I responded that I am not a defender of the economic policies of the Emperor Diocletian....we we don’t really know what happened — what really did go down during the Diocletian era? — you can project what you think should have happened onto the sketchy record, then claim vindication for whatever you want to believe.
Indeed, even Wikipedia covers the topic quite well:
The Edict on Maximum Prices (also known as the Edict on Prices or the Edict of Diocletian; in Latin Edictum De Pretiis Rerum Venalium) was issued in 301 by Roman Emperor Diocletian. Diocletian's Edict was his attempt to curb inflation via price controls. It was counterproductive and quickly ignored.In a more detailed analysis of ancient price control schemes, Thomas DiLorenzo, in 2005, wrote at Mises.org:
In 284 A.D. the Roman emperor Diocletian created inflation by placing too much money in circulation, and then "fixed the maximum prices at which beef, grain, eggs, clothing and other articles could be sold, and prescribed the penalty of death for anyone who disposed of his wares at a higher figure." The results, as Schuettinger and Butler explain, quoting an ancient historian, were that "the people brought provisions no more to markets, since they could not get a reasonable price for them and this increased the dearth so much, that at last after many had died by it, the law itself was set aside."
Bottom Line: Krugman is rushing to diss a point he didn't understand. Translation: Ron Paul landed a hard punch to the face that still stings Krugman.