So, I'm a huge fan of Paul Krugman. I actually work in the same field as that in which he was awarded a Nobel, and his academic work is solid, and I'm generally whole-heartedly in agreement with most of his more recent economic policy analysis. Most attacks on Krugman turn out to be completely off-base -- such as the hack job by Ryan Avent of Free Exchange from a few weeks back. The real problem with Paul Krugman is that there is only one of him -- the world needs for there to be 10-20 Paul Krugmans -- smart, liberal economists who understand the big issues and are out there fighting for it.
However, I think he should have added a caveat to his latest post in which he argues that because the stimulus essentially ends at the end of this year, it's getting pulled away too fast. Thing is, I think the more important problem is that the Fed is not doing more, and certainly by some point in 2011 is likely to raise interest rates. We really are likely to be in a situation in which, even if Congress does more, the Fed might do less. Although I agree, in principal, that Congress should be doing more, I think the Fed is the more important guilty party at this point. We need a competitive devaluation of the dollar, and the way to do that is for the Fed to print money and buy out debt, with the added benefit that this would reducing our future debt payments. Incidentally, this would also put pressure on the Chinese to revalue -- more pressure than having our politicians jaw them but do nothing.