In the New York Times, rehashing ancient calumnies. It must be a slow day.
Dear Paul, let me introduce you to parts of the distribution other than the mean. Inflation risk is a tail event. I am in California now. There is a danger of big earthquakes. That the big one has not happened in the last 5 years does not mean the ground will be still forever, nor that geologists are mendacious idiots ignorant of Bayes' theorem.
My worries about inflation do not come from monetary policy. I've been as outspoken on the view that monetary policy is ineffective at the zero bound as the most solid Keynesian. In the WSJ, "Reserves that pay market interest are not inflationary. Period." If you bothered to read anything before venting, you'd know that.
My worries stem from the western world at 100% debt to GDP ratio, larger unfunded commitments to ageing populations, slow growth, and no solid plan to pay it back. I've been pretty clear that this is a self inflicted wound -- our governments can let economies grow and pay it back, but may choose not to. If bond investors decide they don't want to be the ones holding the bag, inflation will come no matter what central banks do about it.
This mechanism remains a proper fault sitting underneath us. But one that can sit a long time. Just like, I hope, the San Andreas. But the fact that sovereign debt must eventually be repaid, defaulted on, or inflated away, remains an accounting identity valid even in the most rabid Keynesian worldview.
For fun, I spent a few minutes googling Krugman and deflation (sometimes "spiral", sometimes "vortex"), which also did not happen, and in my view cannot happen. But I will resist. It's just too easy to play this game. Economics is not soothsaying, and descending further into the pit dignifies it unneccessarily.