Insanity is doing the same thing over and over again and expecting different results. The last four years of Bush economic policy has been to weaken the US dollar, hoping that it would make US manufactured goods cheaper. The reverse has been the case, all it has done has been to make US imports more expensive. The problem is that there isn't strong demand for our most competitive manufactured export - aerospace - in a high energy environment. And yet the group think drum beat goes on.
More over, it won't help the other Asian economies by that much, since they have huge dollar exposure. They may get more dollars, but these dollars are going to buy increasingly less.
What the world needs to wake up to is that we are watching the death throes of a monetary order, just as the early 1970's were the death throes of the Bretton Woods order. In the late 1960's and early 1970's gold was the lever, because gold was both currency - in transactions between nations - and a store of wealth. When these two functions of money are combined, there is a squeeze play possible - as the impulse to make currency less liquid as there is higher demand for it spirals out of control.
In our case the US has very unwisely decided to make houses the store of value for the middle class, and houses are based on the ability to transport to them. Since housing is also the basis of our currency - in terms of assets on the books of banks - the same problem is running in reverse - the more inflated our houses become, the more money supply can grow. The less liquid the economy is, the more money it has. This generates upward pressure on home prices and starts the cycle over again.
To an Austrian economist this would be called "inflation". I don't agree with the usage, since it does not fit into a macro equilibrium. Increased money supply can produce devaluation as well as inflation. Devaluation is when more and more of the currency is stored as wealth, and the marginal utility of savings drops. As Asia has become glutted with dollars for their current financial system, the value of the dollar has dropped.
The old gold bugs think that this will always show up as gold, because they worship it as an icon. The reality is slightly different, money is what the producer who has glutted their consumption needs will take as a store of wealth. Money, at the moment, is what an Arab prince will take for a barrel of oil. This means that whatever the ultimate unit of wealth is - either what that producer supplies or what that producer demands - is where a monetary system has leverage.
In the early 1970's there was a wealth demand leverage in gold. In the present there is a wealth supply leverage in oil. The difference means that rather than increasing consumer inflationary pressures across the board, since in 1968-1973 increased gold costs lead to increased trade costs and inflationary pressures - there is in the present a deflationary spiral of costs, with an inflationary spiral of the inputs to wealth preservation in the US and distortion of the distribution of pricing power. Since trade inputs are going up more slowly than protected economy inputs, gasoline is both cheap and expensive at the same time: it is cheap as a wealth preservation input, but it is getting more and more expensive as the lubricant to economic activity.
This reverse effect means that many of the actions which will ease the inflationary effect on oil, will exacerbate the inflationary effect on general consumer inflation. Instead of getting inflation across the board, the situation resembels the late 1920's when income for a broad section of the consuming public is falling, while prices continue to rise. The continued extension of easy credit, in both eras, allows this to continue longer than otherwise would be the case, but is creating a massive weakness in the financial system. It is not clear whether this weakness will rupture - you are only insovlent if someone calls you on it - but it is clear that this weakness will continue to pile up until such time as the basic monetary dynamic is resolved. Since nothing is being done to do this - instead we are seeing the equivalent of the "Smithsonian Agreement", to kick the can down the road a bit - it is almost certain that at some point in the not too distant future, some group will find a means to unilaterally exploit the common agreements not to crash the system.
Time is running out for a fundamental shift of policy, and since the US will not change before 2009, time is almost certain to run out. A bubble is when the public tries to monetize stupidity.