Is a Declining US $ a Protectionist Policy?

This week, the US $ fell to a level of just over $2 per British Pound. In fact the US $ has been falling against a number of world currencies over the past few years. Under a falling $, US exports become more competitive in world markets. As Secretary of Treasury Paulson hasn't done much to stop its fall, many investors are starting to believe that a declining $ is now policy.

Is it a reaction to other world economies having greater GDP growth than the US? Is it a policy being implemented to decrease the size of imports coming into the US?

No matter your view on those questions, the simple fact is that a lower US $ is not a good thing when you consider the nation's sizeable trade and budget deficits, that are being largely financed with other nation's investments. As the US $ continues to fall, if these deficits aren't reduced, interest rates will be forced to rise in order to continue to attract those foreign countries that have now become America's banker.