In particular, an individual businessman, no matter how brilliant, never has to worry about the fact that total income equals total spending, so that if some people spend less, either someone else must spend more, or aggregate income must fall.Actually, this is why we have national income accounting.
This is why we have a field called macroeconomics.
Next he posts this piece. Krugman is going to tell us what he would do if he were in Bernanke's shoes. First he would commit to a price level target that implies average inflation of 5% per year. Not unexpectedly, he wants more inflation than Bernanke does, but of course we have no good reason to prefer 2% to 5%, as far as I can tell. Now, the key thing is that he doesn't inform us about how he hopes to achieve this. He says:
The sad truth, of course, is that the chance of actually getting anything like this are no better than those of getting an adequate fiscal stimulus — at least for now. QE as currently contemplated is mild mitigation at best. What one has to hope is that as the reality that we’re in a liquidity trap sinks in...It's not clear what is "currently contemplated," but of course we will find out in a couple of days. In any case, Krugman doesn't tell us what he would actually do to get the 5% inflation. People at the Fed of course know about liquidity traps, which is why they are talking about purchases of long Treasuries, rather than purchases of T-bills. Does Krugman think that more than what is "currently contemplated" would achieve the result he wants? If so, how much? Please enlighten us.