I agree that Krugman is a complete and total idiot and/or a fraud and that Bitcoin has little to fear from deflation.  The infinite divisibility helps to mitigate the upper limit of bit coins which will really never actually be reached but will just become smaller and smaller - the pay out gets halved over and over till infinity right?

Anyway if it stops or just becomes very small no matter.

One thing I disagree with though is the guy that said if deflation is -8% and people want a 5% return they'll just loan at -3% - this is impossible.  Interest must be positive otherwise why would someone make a loan which involves so element of risk to earn less than sitting and doing nothing which involves no risk?  I believe in this environment interest would need to be positive but it could be very slow.  If Bitcoins are forever becoming more valuable then very low rates of interest could pay off big.

Either way I think it's a totally false statement promoted by the powers that be that have something to gain by the status that deflation is so disastrous.