Desktop is too big for the display

Some how this morning while on my Mac a display setting or something was changed. If your on the desktop, with all windows closed, the background, icons, dock.....everything is too big for the display. If you move the cursor all the way to left it will 'slide' the desktop in that direction. Move it all the way to the right edge of the display and it 'slides' the desktop to the right until you reach the edge. Also the same for the up or down directions.

At first I thought it had something to do with the multi-touch track pad, but I don't think so. I have checked all the display settings I can think of and have tried re-sizing the desktop to all other settings in an attempt to fix the problem. Additionally I have restarted/shutdown the computer totally to see if it would fix the issue. No success. Please help.

Thx,

Audioboy