It's Ron Paul vs. Federal Reserve (and the market). Who's right?

It's no secret that former Texas Congressman Ron Paul is no great fan of the Federal Reserve, nor of pretty much any other arm of the government.

That said, listening carefully to his thoughts about the U.S. central bank may prove instructive. The libertarian firebrand's remarks encapsulate some of the unspoken qualms many hold about the state of the American economy and her equity markets.

In an interview with CNBC's "Futures Now," last week, Paul reiterated his deep skepticism about the Fed and its loose money policies.

"After 35 years of a gigantic boom market in bonds believe me they cannot reverse history and they cannot print money forever," Paul said.

Read MoreCiti economist: Fed is too chicken to hike rates

The central bank has limits in what it can do to support growth, Paul said—meaning disaster may lie just around the corner.

"It's the fallacy of economic planning through monetary policy that's at fault," the former Congressman said, adding that monetary policy decisions have "nothing to do with freedom and free markets and capitalism and sound money. It's all artificial, it's all political and that's why we're so vulnerable."

Who's right and who's wrong?

For some, it's the concept of "artifice" that's particularly telling. Paul's political philosophy naturally leads him to oppose any flavor of government intervention, given his basic premise that more government is almost never good.

If the Fed's actions have done anything to improve the state of the economy, then, the economy must be on shaky, "artificial" ground—and primed for a recession and stock market crash in the near future.

So why hasn't that happened yet—even after years of gloomy predictions?

"I think the Fed is very efficient and the Plunge Protection Team is very efficient and they have gained a competence in the market, that the Fed won't allow this market to drop," Paul said. He referred to the conspiracy theory that the Fed periodically sees fit to directly intervene in the capital markets by entering long equity positions.

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Paul warned in his 2008 book "Revolution: A Manifesto" that when the Fed takes stimulative action, "it creates all kinds of economic problems. It decreases the value of the dollar, thereby making people poorer," he wrote.

"When the money supply is increased, prices rise--with each dollar worth less than before, it can purchase fewer good than it could in the past," he added. "The average person is silently robbed through this invisible means."

Yet after three rounds of quantitative easing, in which the Fed directly created money to buy bonds in the open market, inflation has remained quiescent, with deflation often posing the more realistic threat.

That leaves Paul waiting for the fulfillment of the other half of his 2008 prediction; namely that "in the long run, even the apparent stimulus to the economy that comes from all the additional borrowing and spending turns out to be harmful has well, for this phony prosperity actually sows the seeds for hard times and recession down the road."

Paul's not the only one. Skepticism about the stock market's "artifice" runs deep, and may partially explain why the rally over the past six years has been one of the most maligned in history.

Concerns about the Fed have "created the single biggest opportunity over the past six years," said investor and financial writer Mark Dow in an interview. "Everyone, at every turn, has overstated the damage that would be done by the Fed. Everyone said stimulus wouldn't work," he said.

"And if you had bet on the Fed not causing inflation, if you had bet on the Fed being right about there not being a big spike in interest rates, if you had bet on there not being a 'Lehman Two,' if you had bet that low rates were not going to produce a bubble…that was the trade, and that is the trade still," Dow added.

As one particularly salient example, market strategist Peter Boockvar predicted in September of 2014 that "the two-year bear market for gold is over, and the uptrend is going to resume." He added that "gold is your defense against the policies of the Fed."

Gold was trading at about $1,370 when Boockvar made those remarks; the metal is currently near $1,200. In other words, gold may indeed have served as a defense against the prospect of the Fed causing massive inflation.

Yet with inflation still nowhere to be seen, and the Fed apparently preparing to raise rates, it's proven an expensive insurance policy. (Although, as Paul pointed out on Thursday, gold has served as a far better store of value than the U.S. dollar over the past hundred years.)

Of course, predicting the future for stocks or the economy is what some might call a fool's errand. But one thing remains clear: Those who have followed Paul and enshrined his philosophy into their investment decisions have, at best, missed out a gigantic rally in stocks.

Actually, they may have done worse than that, if they had also followed the libertarian party line on gold and on bonds.

For instance, CNBC once spoke to a skeptical investor, who lamented his decision to short stocks and buy gold in 2013—a year in which the S&P 500 Index rallied nearly 30 percent, while gold did the opposite.

The Fed has not committed any obvious policy errors thus far. But critics of the central bank's "artifice", who deal in the staid worlds of economics and philosophy rather than the flesh-and-blood realm asset allocation, appear to have made a huge one.

--Clarification: An earlier version misidentified the year in which the skeptical investor spoke about missing out on the rally.

—By CNBC's Alex Rosenberg.

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