That CNBC/MSNBC debate on Tuesday, the one ostensibly pegged to "Your Money '08," was supposed to be Ron Paul's Passchendaele. "There are plenty of people to whom Paul's anti-war, limited government message appeals," The Scotsman's Alex Massie wrote, "who might pause to reconsider their enthusiasm if he's seen banging on and on about returning to the gold standard. It may be a dangerous moment for the campaign." And the dangerous moment came early, after the top three Republicans had fielded their first questions and Chris Matthews asked Paul about "the bonanza in the hedge fund industry."

"There's transfer of wealth from the poor and the middle class to the wealthy," Paul said. "This comes about because of the monetary system that we have. When you inflate a currency or destroy a currency, the middle class gets wiped out. So the people who get to use the money first—which is created by the Federal Reserve system—benefit. So the money gravitates to the banks and to Wall Street."

Ah, yes: Here was the Ron Paul who shuffles into the House chamber at midnight, banging on about sound money with the righteousness of Huey Newton outside a police station. If you pricked up your ears you could hear sixteen little clicks as the rest of the GOP contenders bounced their eyes around their sockets.

Paul went on. "Today, this country is in the middle of a recession for a lot of people. Michigan knows about it. Poor people know about it. The middle class knows about it. Wall Street doesn't know about it. Washington, D.C., doesn't know about it." He swatted at all of the economic optimism that had just come out of Fred Thompson, Rudy Giuliani, and Mitt Romney.

And when he wrapped up, he was punished with... a lusty round of applause.

The day after the debate, as I talked to beltway libertarians ("the intellectuals who congregate in Washington outfits like the Cato Institute or Reason magazine," as Michael Crowley has it), I found some resigned sighs and quiet disdain of Paul's economic answers. The only man in CNBC's post-debate punditocracy who supported Paul was that renowned student of Rothbard and Hayek, Robert Reich. "He touched on agricultural subsidies," Reich said. "He touched on military bloat: These are the things the other mainstream Republican candidates aren't talking about. They should be talking about it." Kudlow gingerly moved the topic to budget-cutting.

There were good reasons for Paul's reception, ones that tie into his resilience in the GOP race and the top candidates' inability to excite the base. Republican voters are angry. They're mistrustful. They feel burned out, spurned, and uneasy. And their party has both exacerbated their anger through campaign strategy and let that anger fester with what was thought, for a long time, to be a benign neglect.

Let's look at the neglect first. Cast your mind way back into the hazy days of 2004, when liberals were sputtering at the way poor or middle-class Republicans who hated their party's economics still trusted them on culture. Thomas Frank's What's the Matter With Kansas was one long jeremiad on this theme; one of its subjects was a rural Pennsylvanian who said Republicans were "tired of everything being wonderful on Wall Street and terrible on Main Street." Frank was stunned at this, the grotesque spectacle of rubes "voting Republican to get even with Wall Street."

Well, they still feel that way about Wall Street. They're just a little less excited about voting Republican. This month's Wall Street Journal poll (PDF link) was a revelation, a one-point proof that the conservative base is distancing from its spokesmen like Giuliani, Romney and Kudlow. Sixty-one percent of Republicans said they favored "tougher regulations to limit imports of foreign goods." Fifty-nine percent agreed that "foreign trade has been bad for the U.S. economy."

And why shouldn't they believe this stuff? The Republicans in power haven't worked to convince the country otherwise. They have sloganeered, sure, with arguments for tax cuts and paeans to American know-how best summed up by Sam Brownback's Bill-and-Ted-by-way-of-Branson one-liner: "This place rocks!" And then, when brainstorming ways of convincing nervous home-owners or manufacturers that their policies are working, they blame it on the Others beyond our borders.

California Rep. Duncan Hunter was a shambling joke of a candidate on Tuesday, a Nixonian flop-sweat machine with charisma on loan from Paul Tsongas's estate, but it's actually his arguments that Republicans have been borrowing to mollify the base. At the debate the frontrunners (and Paul) cheered the idea of Borse Dubai buying 20 percent of Nasdaq. Last year, when Dubai Ports World was set to take over six U.S. ports, House and Senate Republicans howled as if Mehmet II was sacking Constantinople.

And, of course, the party has espoused Hunter's build-a-wall ragemongering about illegal immigration. Its strategists haven't given up on that. In Massachusetts' Lowell-centered 5th Congressional district the GOP is making a surprisingly strong bid to win an open seat that's gone Democratic since the 1970s. The election is next week, so for the final stretch the Republican campaign has released a mailer attacking SCHIP. Not on its merits, and not on the idea of raising sin taxes to pay for expanded health care mandates. It attacks it for "giving benefits to illegal immigrants."

It's a strange argument for no small number of reasons—aren't we supposed to be worried about illegal immigrants bearing tuberculosis and leprosy?—and in the bigger picture, it's incredibly damaging. Arguments like this undermine the mainstream Republican argument that America's economic engine is humming along and that more government intervention will only slow that down. It tells people that they're right to be worried. Foreign powers and illegal aliens are making their lives harder, threatening disaster. And because Republicans aren't actually able to stop or retard these externalities, this is a double whammy: a much-hyped threat that the "elites" can't, won't, and don't know how to combat.

"An economy has psychological or, if you will, spiritual, dimensions," Charles R. Morris wrote when pondering the gap between glistening macroeconomic numbers and rock-bottom consumer confidence polling. "A conviction of fairness, a feeling of not being totally on one's own, a sense of reasonable stability and predictability are all essential components of good economic performance." When Republicans are cheap and dishonest about economics, worried voters indulge their fantasies about who's to blame for their angst. That's the context in which Wall Street and bank-bashing starts a room to cheering. That's another reason why Ron Paul has stopped being a punching bag and started looking like a mirror held up to a party in deep, deep trouble.

David Weigel is an associate editor of reason.