One of the worst things for Libertarians about the Bush presidency was that the public associated Bush's failed economic policies with free market economics. This is despite Bush's policies being at most only rhetorically free market. The tax cuts were supposedly part of a "starve the beast" philosophy but throughout Bush's presidency government spending did not decrease and he actually increased future entitlements when it came to Medicare Part D. It was a "Have your cake and eat it too" policy, or as the Italians say "You want your barrel full (of wine) and your wife drunk.
" And rather than decreasing regulation he increased it by signing laws such as Sarbanes-Oxley, a bill that makes it very expensive for small businesses to raise money in the public markets.
If Ron Paul were elected, he would do a lot of good. He'd be able to stop prosecuting the ridiculous drug war and would work to reduce a lot of the ridiculous regulatory red tape in our economy. However, he would also do what he could to enforce a very tight monetary policy. It's unclear how much he could sway the Fed, but the explicit threat of losing their independence could prevent them from easing when needed in the future. In fact, it might be a large part of what is currently holding them back from easing more now even though nominal GDP is so far below trend.
As much as Ron Paul would do a lot of good it would be unfortunate if the public came to associate libertarian policies with low economic growth due to an excessively tight monetary policy.
However, with Ron Paul only in second place in Iowa and without a broader base of support this is still a very unlikely event (7% on intrade). And if this ever became a real issue I would categorize it as a high class problem.