1. Should have spent a lot of time talking to Republicans.
2. When meeting with Ron Paul, the following should come to his mind: “I have great respect for the proponents of hard money and I view them as one reason why America became great again, in the 1980s. I know you think the minimum wage is worse than we at the Fed do, so please let me bring one argument to your attention. Unemployment is very high now, perhaps in part because the minimum wage has raised forty percent in the midst of a downturn a few years ago. But those statists in Congress simply will not vote to lower or abolish the minimum wage, damn them. We can, however, surreptitiously lower the minimum wage in real terms with a bit of loose monetary policy. I know you are not with us on this monetary issue, but if you find yourself having to strike a compromise of some kind, at least rest assured that a budge from your side would be liberating millions of lower-income Americans from slavery. It could get us off the Road to Serfdom.”
The Fed governor doesn’t have to believe that, and may not wish to say exactly that, but a speech of that nature should come rather quickly to his or her mind. If not, he or she is probably not the right nominee in the first place. The Fed staff can figure out the rest.
Addendum: Matt Yglesias offers relevant comment. Alternatively, Felix Salmon may be correct that there is no deal to be made with the Republicans. In that case, a) Diamond would not have mattered anyway, and b) we still should base the choice upon the scenarios where the choice stands a chance of making a difference. Furthermore, the Republican reps. do not have the same incentives as the Presidential candidate, so a deal may be possible after all.