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Eugine_Nier comments on Mathematicians and the Prevention of Recessions - Less Wrong
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My understanding is that Krugman is not wrong, he just writes correctly but very misleadingly for reasons that are not totally clear.
Oh, I think his reasons are pretty clear. They basically amount to politics.
I found the article "The Deflationist: How Paul Krugman found politics" educational on that point.
Holy crap: that article has "get to the point":fluff ratio of about 5%. I appreciate the link, but just want to warn readers they need to skip past a lot of meandering about scenes from NYC to get the answer to the question.