Larry Kudlow has a great post at the Corner explaining why much of the economic hardship we are currently facing is self-inflicted.

Whether it’s energy, wheat, grain, corn, or whatever, since these raw materials are priced in dollars on global markets, a strong greenback will reduce commodity prices. And that, in turn, will lower both consumer and producer inflation. This would help corporate profits and would boost the purchasing power of wages.

In other words, a strong dollar would relieve gas prices and boost the economy. But so far as I know, the president never mentioned the dollar. And I don’t think any of the media people asked him about it.

Right now Mr. Bush should order his Treasury Secretary to appreciate the greenback and work with the G7 for concerted action that would send a strong signal to commodity and currency traders that they better close their short positions on the dollar and stop speculating on higher and higher commodity prices. Mr. Bush himself should adopt new rhetoric on a strong dollar. He should make it unambiguous.

Both Hank Paulson and Bush have beaten the drum loud and long on a “strong dollar” policy. Unfortunately that is all they have done and the US peso is now worth only $1.06 Australian, .5 Pound Sterling, $1.01 Canadian (!), .64 Euro, 103.4 Yen, and 1.03 Swiss Francs! This is beyond nuts it is only a course steered by someone with nothing left to lose. The reason we have crashed the value of the dollar is because that is the only way of keeping our ballooning national debt from taking away higher percentages of our GDP.

Now we are left with a weak US peso, inflation expectations of 6.8%, exploding food and fuel prices, an expanding national debt and greater federal spending than ever before. This is not how I expected the Bush years to end.