"The worst president in American history is Abraham Lincoln, who slaughtered 700,000 Americans!"

A hot, sticky crowd, overflowing from a room meant for 478 people, whoops it up when Andrew Napolitano makes that claim. They are here for the Liberty Forum, an unofficial offshoot of the 36th annual Conservative Political Action Conference in Washington, DC. All of them are supporters of Ron Paul.

The persistent popularity of Paul, the 72-year-old libertarian congressman who raised $35m in a quixotic Republican presidential bid, is one of the head-turning shocks of CPAC. Walk into the Omni Shoreham Hotel, the site of the conference, and a smiling volunteer for the Campaign for Liberty – Paul's new organisation – will hand you a flyer for one of their meetings. They're everywhere.

"We've got 140 volunteers," said a smiling Jesse Benton, the Campaign for Liberty's communications director, at a Wednesday happy hour sponsored by libertarian Reason magazine, the de facto CPAC pre-party. After a month and a week of the Obama presidency, the group has raised $300,000.

One of the volunteers is Jeff Frazee, who turned 26 years old this month and could pass for 18. He heads up Young Americans for Liberty, a collegiate companion to the CFL that held its own student conference last weekend, with the aim of starting 100 chapters by the end of the year. They've launched Young American Revolution, a magazine featuring articles from students and writers for conservative publications like the American Spectator and Pat Buchanan-founded American Conservative. The cover story, illustrated by a painting of Ron Paul rolling up his sleeves to box with Barack Obama, is about how Paul is inspiring young people. An interview with Paul ranges from his plans for 2012 to his investments in precious metals.

"I never had to use my gold coins," says Paul. "But it didn't hurt me [to have them]."

Fifteen thousand copies of the magazine are being distributed at the conference, many at the YAL booth, next to a wall of balloons that attendees can puncture with darts to win either paper money – "fiat money" – or candy. It's an educational tool to teach students why paper money is worthless compared to gold.

"Everyone gets it," says Frazee. "The idea of printing up money doesn't work. There's a value in candy, and there's no value in paper money."

In previous years, Paul found a sea of critics at CPAC. George Bush was president, the Iraq war was being hotly debated in Congress and the enthusiasm for an old-style, isolationist conservative obsessed with the monetary system was limited. On this Friday in 2009, though, Paul is a superstar. The line for his speech snakes out of the main hall, up a flight of stairs and past a registration desk.

Paul's speech is familiar to anyone who's ever seen him speak, a 20-minute lecture on the monetary system with appeals to the legacy founding fathers and winking comments on how the Republican party should have listened to him earlier. "A good conservative," says Paul, "will start preaching about how we have to get rid of the Federal Reserve system!" As bad as the GOP had been in power, the Democrats and Obama would "make us look like pikers!"

But while the speech doesn't draw much applause – Paul has never shaken a habit to stampede through his text and run over applause lines – what's striking is what the audience doesn't do. It doesn't boo when Paul attacks the war in Iraq and "policing the world". It doesn't move as Paul burrows into the theory of Austrian economics. The audience is steadfast, glued to the seats.

What's changed in two years? It's not only that Republicans have lost an election – it's that Republicans do not yet understand why they lost. They are not willing to consider that they lost votes because Americans wanted more social democratic policies. The official explanation for their loss is that Republicans spent too much money and lost touch with their values. It only makes sense that Paul, who has been arguing for years that the GOP needs to get back to the values of pre-New Deal America, should be winning over young hearts and minds.

As Friday winds to a close, CFL volunteers advertise a launch party for Young American Revolution, held at a bar called Asylum. The event fliers sport a photo of Barry Goldwater and a parody of his most famous quote: "Extremism in the defence of liberty is no voice, and moderation in the pursuit of drinking is no virtue!" At the bar, Paul staffers, volunteers and young students attending CPAC throw back beers and talk about how many people have come around to their thinking.

"I haven't met anyone who doesn't like Ron Paul," says one student. "Notice how all these assholes who are giving these talks, they're saying exactly the same thing Ron Paul said last year?"