Is the Bond Market wrong?

Quiz.

Paul Krugman posted this chart in his NY Times blog to support his conclusion that the paranoia in DC about inflation fears are totally unjustified. The over-riding issue to him is insufficient stimulus a la Keynes. The chart shows net deb/GDP in the US is nowhere close to alarming since there are those countries with higher or equal relative levels of debt.

1) Provide no more than 2 reasons why Krugman could be right.
Hint: investigate into the Fed's balance sheets

2) Provide no more than 2 reasons why Krugman could be wrong.
Hint: Look up Dr. Doom's writings and his comment on Bloomberg TV that US "will become Zimbabwe", to be sure for dramatic effect to make a point!! By implication, Marc Faber and those who are long gold, short the dollar, believe the bond market is wrong while Krugman clearly believes it is right.