The simple facts are that the American Dollar is losing value because the money supply is to loose; you can blame this on either the $500,000,000,000 deficit the government is running or on the historically low treasury rate. This problem is being made worse because central banks around the world are lowering their reserves of American dollars in favour of more stable currencies (the currency of choice is the Euro but the Great Britian Pound, the Canadian Dollar and the Austrailian Dollar have also seen increased holdings).

Now, commodity traders don't care about the underlying economy of the currency they trade in they simply want a stable currency in order to limit their risk of holding or exchanging money. There are really only a handful of economies large enough for their currency to handle commodity traders without impacting the value of the currency; these are the Japaneese Yen, American Dollar, Great Britian Pound and the Euro.

Being that commodities traders are losing a lot of money because how unstable the American dollar has been for the past 5 years there is a movement to switch to trading Oil, Natural Gas, Gold, Silver and a variety of other commodities to the Euro rather than the American Dollar. Most people are being patient mainly because it costs a lot of money to produce a new futures exchange, but if the American Dollar continues on its path I would expect to see many traders push for a European futures exchange to become the new home of these commodities.

That is too easy Timmah. Sure it does not look too bad for the people at the moment, but there is a way bigger bubble growing than the one that blew up in the housing market recently.

One thing to consider is why the USA, a huge country with a lot of resources, has such a negative trade bilance. This leads to a lot of dollars in the hands of Europeans, Asians and other foreigners. This fact, in combination with a low, sinking dollar is very dangerous. If those central banks will start to sell their dollars, nobody will be able to stop the inflation anymore, and lowering the interest rates won't help here either.

Of course, those problems did not come up in bush's era (Reagan is responsible for most of them, in fact), but he hasn't done anything to solve them either.

It's awesome, right now if I'd buy the 80GB PS3 in the states instead of buying it in Canada, I'd save 30$.

I agree that the trade deficit is a problem, but I just get sick of so many people blaming that (and everything) on Bush. It's been going on since Regan, through Bush 1, Clinton, and now Bush 2. What's a president supposed to do in this circumstance?? In a free market, the government isn't supposed to just limit imports. If all of a sudden we couldn't buy imported products, prices on everything from TVs to Microwaves to Cars would shoot up and there would be mass shortages. This would cause just as much or more problems than the existing trade deficit. Tariffs have been suggested, but that causes price increases, strained relationships with countries, etc. It's a really tough problem, and the 'catch-22' nature of the issue has made it very difficult for our political leaders to deal with it (they're damned if they do, damned if the don't).

Most western 'developed' economies have a trade deficit. This comes from the fact that we have transferred over to a more service-based economy. That means many people have decided they don't want to work in product production and would rather be technicians, doctors, lawyers, etc. Also, the cost to pay a living wage to production employees makes it hard to compete with emerging foreign countries that do not have the same standard of living and high wages as the US (or any other developed economy). This leads to most developed economies having trade deficits with less developed countries that can still produce cheap goods.

This is an interesting read, America's misunderstood trade deficit:

http://www.freetrade.org/node/358

Be sure to read the 'Myths' section.

Of course it is not easy to solve the problem of the trade deficit, and as you say taxes on imports or something like that wouldn't cause other problems. But it would work the other way around: If the USA would be able to raise their exports, the deficit would be smaller too, and this should be possible in a free market.

You are right that there are several industrial countries which have a trade deficit, but as you may know, I am a Swiss, and Switzerland has a positive trade bilance and has had it for years.

I think this is respectable because we have almost no resources (no oil, metal gas or whatsoever) we are a small country, don't have too much geographical advantages and we are lacking whole economical branches (we don't build cars or electronical entertainment devices for example).

Looking at this, I really don't understand why a country like the USA that would have the potential to produce almost everything at home has such a huge deficit in its trade bilance.

This article states that one of the ways to reduce a trade deficit (and the most pleasant from what I recall) is to reduce the budget deficit.  Bush has presided over the most outrageous and needless budget deficit since the early days of Reagan's presidency -- largely as a result of his tax cuts, which are widely credited with prolonging the recession of the early 2000s.  So yes, Bush has negatively affected the economy (along with the Republican party overall; I agree that he - and even his administration - couldn't significantly damage the economy singlehandedly). 

By the way, the economy and stock market are recovering nicely when you look at the numbers, but what about looking at wages?  It might not be a "jobless recovery", any more, but the working man has not enjoyed a comparable increase in real wages AFAIK, and I have done a little poking around on this subject.  

Tax cuts cannot prolong a recession!! It's impossible. The tax cuts helped pull us OUT of the recession, 9/11 is what exacerbated and prolonged the recession. People forget what happened so easily.

Explain to me how more money in the pockets of the American people can possibly be bad for the economy let alone PROLONG a recession, it just makes no sense at all and has absolutely no logical basis in ecenomics.

I never said anything about Bush's spending policies. For one, spending policy is largely the fault of congress, but Bush is also at fault for not vetoing the exorbatent spending of the past years. I strongly disagree with congress and the president on the spending policies that they together have created. I think that tax cuts along with spending cuts are what is in the best interest of the nation.

The budget deficit is not a result of the tax cuts, in fact the budget deficit has gotten smaller ( http://www.reuters.com/article/topNews/idUSWBT00724820070711) because the federal tax revenue has INCREASED significantly after the tax cuts (this is due to a stronger economy causing money to change hands more often, a proven side effect of tax cuts. More money is moving around the economy, thus more taxes are collected even at the lower rate) http://www.cbo.gov/ftpdocs/81xx/doc8116/05-18-TaxRevenues.pdf. This is IN SPITE of the out of control spending. The budget deficit is due only to out of control spending in Washington, I blame that on both congress and the president. They are both culpable in this issue. You fail to realize, however, that the budget deficit has decreased in recent years due to the increase in revenues after the tax cuts. Thus your blaming the budget deficit on tax cuts just doesn't make sense.

Also, wages have been rising at a pace faster than inflation since 2006, something that hasn't happened for a while. http://www.csmonitor.com/2006/1120/p01s03-usec.html

Pretty much all of your statements about taxes, wages, deficit, etc are not true. This is an example of mis-information propogeted by a habitually negative media. Negative media = scared people = more viewers = more ad revenues for the news stations.