Bitcoin is extremely inflationary right now. Look at how much BTC is created annually. It will become less inflationary over time, but we are not there yet. The fallacy of deflation has been discussed numerous time. Krugman fails to convince me (and many others). On top of that, Krugman has proven to either not to understand economics or talk the official book. Be cautious, do your own thinking.
I would add that bitcoin is the experiment that may prove these theories (People do less x when more y happens p<0.05, n<0.0001% of the population) wrong., so you should be watching even if you think it will fail as a medium of exchange.