Trump's Economic Illiteracy on Full Display: Trade Deficits and Interest Rates

President Donald Trump's economic illiteracy has been on full display once again. In an Oval Office event, he claimed that the US could 'save' money by not trading with other countries. This is a fundamental misunderstanding of trade deficits.

A trade deficit does not reflect a loss, but rather a situation where one country imports more goods and services than it exports to another country. Trump's family has a deficit with their local grocery store when they buy its products but do not sell any back to them.

However, this is not a bad thing; it allows the family to access goods and services from the store that they would otherwise not have. Similarly, trade deficits allow countries to import goods and services from other nations that they may need or want.

The president also threatened to curtail all trade with US trading partners unless the Federal Reserve agreed to slash interest rates. He claimed that economic growth is unrelated to inflation and that we are entitled to lower interest rates because he thinks we're awesome, not because of economic conditions.