While deflation is the bogyman to the central bankers, unemployment appears to be the arch-nemesis of the Krugmanites (Keynesians). The problem is that as I've mentioned many times before, unemployment is created by governments artificially diverting 'good' production to areas of 'bad' production though shoddy policies and incentives. Krugman and co. argue that the government will have to spend big to fix the looming 10% unemployment rate and is actually worried that the planned $1 trillion isn't enough! What Prof. Krugman doesn't understand is that it is production which inherently drives employment. We can have full employment without full production; we can't have full production without full employment.

I don't want to get too deep into this as there's plenty of commentary against Krugman's policy advice to date, so I'll just paste a clip from Henry Hazlitt's Economics in One Lesson which will hopefully open some eyes:

Primitive tribes are naked, and wretchedly fed and housed, but they do not suffer from unemployment...Nothing is easier to achieve than full employment, once it is divorced from the goal of full production and taken as an end in itself. Hitler provided full employment with a huge armament program. World War II provided full employment for every nation involved. The slave labor in Germany had full employment. Prisons and chain gangs have full employment. Coercion can always provide full employment. -- Henry Hazlitt, 1946.