In a post, Krugman links to a Mish article that contains the above. So does Krugman answer Hoppe's challenge? Of course not. As Hoppe predicted, he can't, no one can.
Krugman writes this instead:
Aside from the silliness of the exercise, this little exchange is another illustration of a point I’ve noticed before: the way hard-right commentators assume that the other side must be their mirror image. They insist that no government intervention is ever justified; so liberals must support any and all government interventions. They want smaller government, as a principle; liberals must want bigger government, never mind what for. They believe that deficits and printing money are always evil; liberals must be for deficits and money-printing under all circumstances.But no answer to Hoppe.