Stocks are now at two-year highs, bonds are up, oil is at a two-year high, health care, child care, education are all up at much faster rates than income and employment - none of which show up in the CPI.  Add to that all the commodities I listed above and we are in a period of diminishing purchasing power for consumers.  

Deflation says that because of declining credit, people will hold onto whatever money they have for dear life, unsure if more money will be forthcoming and the velocity of money will slow and collapse.  Housing prices show this to be the case in that industry.  Housing is also something the Fed is justifiably worried about due to its importance to the health of bank balance sheets and consumer wealth.  Credit and lending is also a concern for the same reasons.  I am not against what Bernake is doing.  But state economic policy needs to consider that while the Fed is chasing that bogey, what other impact will it have on the economy (you cannot print trillions of dollars or borrow it from China, OPEC, Brazil, hedge fund managers, etc. without any consequences somewhere else).  Government needs to understand what those consequences may be and construct policy that addresses it.

Inflation simply involves the world's central banks printing up new money to swamp both the commodities markets and people's preferences to hold something that can be created without any effort or cost.  The fed has already publicly acknowledged that the transmission mechanism for monetary policy is now the global risk asset markets, not the traditional domestic banking system. That right there tells you the Fed is blowing up global commodity prices and the short-term trading values of equities, corporate credit, and all manner of derivative risks, not loans to Main Street.  Commodity prices are nearing their all-time peak and have been compounding at an average annual rate of slightly more than 10% over the past decade.  I am not Krugman's equal by any means, but I think he is falling into the trap of cherry-picking the 2008 topping event as his reference point.  

Polls show that voter-consumers are suffering from what experts call "brand confusion." They can't stand the most visible personal symbols of the congressional party -- Nancy Pelosi and Harry Reid -- and voters don't trust the Democratic brand on issues (such as jobs and the economy) as strongly as they used to.

And now comes the Obama-McConnell tax bill.

First, some caveats about it.

Sure, the tax bill contains an extension of unemployment benefits. But that used to be a matter beyond mere politics, and something Democrats in the old days never claimed as a major achievement. They certainly didn't make it sound like a major social achievement at a time when they controlled the Congress and the presidency and, therefore, were at least partly to blame for the fact that so many people were on the dole in the first place.

The fact that extension is being touted by the White House as a major "get" is a sad commentary on how far to the right our politics is now moving, no matter how many times Tea Party types call Obama a socialist.

Yes, there are some helpful tax credits for the middle class in the bill -- helpful if your household has any income to take the credit against.

And depending on which poll you read, the overall deal is somewhat popular -- perhaps because voters are reacting according to the old Navy crisis motto: "Don't just stand there, do something!" Or the fact that almost no one in America doesn't like a tax cut.

I get all that. But still, something doesn't compute.

I admire Obama's ideals as you lay them out, I think fairly accurately, but I think such a person in the White House at this point with this political climate is an largely unmitigated disaster.

if Obama were really a pushover or a "wimp" which is the new attack

Just an FYI:   That's the old attack. The new attack is that he is acting on his own views.

online comments on the interview include this one

President Obama was not elected as a pragmatist. . . . He was elected by voters who believed that he would take action to advance the moderately progressive policies he espoused during the campaign. But not only has the president failed to advance those policies, he has actually opposed and obstructed them. James Kloppenberg's thesis begs the question of the difference between true pragmatism and an inflexible attachment to the philosophical doctrines of pragmatism. If we grant Professor Kloppenberg's overarching point regarding President Obama, the explanation for the president's behavior in office is the president's unwavering espousal of a set of philosophical doctrines. As a practical matter, then, the president is not a pragmatist. He is an ideologue. One can understand [liberal & progressive] voters' dismay and impatience, especially after eight long years of Bush/Cheney. . . .

The Audiology of Hope: DLC Dogwhistle Economics

The Audiology of Hope: Dogwhistle Economics 102

Audiology of Hope 360: Special Topics in Health Care Reform