The Rate of Inflation Under the Bush Administration

The CPI inflation calculator uses the consumer price index to measure the purchasing power of the US dollar and has been calculated every year since 1013. For example in 2000 it took 17.39 to purchase what $1.00 would purchase in 1913. In 2008 the figure stands at 21.57 one of the biggest hikes since the 1970’

s. This figure does not speak well for the economic policies of the Bush administration.

The current economic crisis faced by the US can, in part, be traced back to the deregulation frenzy of the GOP controlled congress of the 90’s with the partial cooperation of the Clinton administration. With many of the safeguards in place since FDR’

s New Deal rescinded many financial institutions began to engage in risky and sometimes irresponsible behavior. Many Forex traders say that this behavior puts the dollar at risk.

A Weak Dollar

Since January 2000 when Bush took office the dollar has fallen by 37% against the Euro with two thirds of that decline taking place since 2006. The dollar has also fallen 31 percent against the Canadian dollar, and 17 percent against the British pound. With a weaker dollar oil producing companies began demanding higher dollar prices to offset losses against the Euro. Because of a weakened dollar oil cost 28% more in 2004 than in 2000. The declining dollar also pushed commodity prices higher because investors moved money into commodity futures to protect themselves against the falling dollar resulting in higher food and fuel prices for the average American. At present the dollar is holding its own but many Forex traders are expressing concern about the ultimate future of the dollar.

Effects of the Weak Dollar

With rapidly rising prices for necessities many families found themselves financially distressed and rapidly crumbling mortgage markets and falling home prices only made things worse. Many homeowners saw the equity in their homes deteriorate and what was once seen as an investment now became a liability for many. The massive debt incurred from the misguided war in Iraq and the recent near collapse of the US baking system has further eroded confidence in the US dollar.

The Bailout and Forex Traders

The proposed $700 billion dollar bailout proposed by Treasury Secretary Paulson and the Bush Administration leaves the US with record deficits and has shaken world money markets. Although the dollar made slight gains recently the outlook for the future is less than optimistic. The fact that the US is in the middle of a presidential election cycle adds more uncertainty to the future of the dollar.

If US presidential administrations were to be judged on monetary policy alone, history would not be kind to the current Bush Administration.. The mistakes and mismanagement of the current administration will be felt well into the future.

Quick Forex Tip: If you have extensive knowledge of forex markets, you may want to trade forex futures. A forex future is an agreement to buy or sell a specific amount of currencies at a predetermined price on a set date in the future. Essentially those who trade forex futures are hoping to profit from a currency’s future fluctuations.