GEORGE W BUSH: I think that we're in an unusual period. We went to 52 consecutive months of uninterrupted job growth. And-- like any free-- free market, there's-- there's-- there's also downturns. And we're in one. And the question is how best to react during the downturn.

Unfortunately, we anticipated the downturn. And have proposed a temporary robust stimulus package. Which hasn't yet to happen. And so-- and-- you know, people-- people believe-- the experts believe, and they tell me, and I'm certainly no economic expert.

But they tell me that this package will have a very positive effect on the economy throughout the year. Secondly, there's-- you know, obviously, having to deal with issues-- in the-- credit market. And, yet, today you noticed that the Treasury Department and the Fed acted expeditiously. Acted firmly without creating what's called moral hazard. And the Fed is also, obviously, maintaining a watch on inflation. And-- and, at the same time, sending signals that they're interested in robust growth.

LARRY KUDLOW: Are you worried about this inflation story? It's really just kind of snapped up in the last three or four months.

GEORGE W BUSH: I-- you know, to--

LARRY KUDLOW: Kind of come out of left field.

GEORGE W BUSH: Well I--

LARRY KUDLOW: Nobody expected it.

GEORGE W BUSH: What I'm worried about is the downturn that we're in. And-- these stories get exacerbated because we're in a slow down. And, of course, we're watching-- or, in this case, the Fed is watching-- the relationship between inflation and growth. And-- I've got all the confidence in Ben Bernacky (PH). I think he's doing a very fine job during difficult times.

LARRY KUDLOW: But what about the dollar? A lot of people are pinning the inflation problem on the continuous decline in the dollar.

GEORGE W BUSH: Look, the-- the-- the-- the-- the-- we're for a strong dollar in the-- in-- in-- with the US government. And the best way to-- and-- and-- and economies go up and down. And-- but the-- I'm confident in the long term strength of the dollar.

Because I'm confident in the long term strength of our economy. And what's very important during this period of time is to show the world that we're not gonna leave behind a regulatory-- or law that'll make it difficult for our market to recover. In other words, not gonna overreact during this period of time with unnecessary law. That we're open for trade and investment. And so that the long term part-- picture for the United States economy is gonna be as good.

LARRY KUDLOW: But you said, yesterday, in another interview, that you were for a stronger dollar, comma, absolutely.

GEORGE W BUSH: Well, you know--

LARRY KUDLOW: It kind of sounded like you were changing your rhetoric or changing your policy.

GEORGE W BUSH: No, no, no. That's the problem with this rhetoric on monit-- on-- on-- on dollar policy. If I even put a comma as opposed to a period people are suggesting change. We-- we-- our policy has not changed. We're for a strong dollar.

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