The US deficit is NOT caused by the behaviour of non-US trade partners, whether "fair" behaviour or "unfair". It is caused because the US consumes more than it produces.

Really? Running the deficits we have run, we still have reasonably low interest rates. We still have a rush in of foreign money to fund American debt at what are not outrageously attractive interest rates.

It seems to me that if the US was to somehow mandate that it consume no more than it produced, that there would be no "demand" for foreign money for either capital investment (foreigners buying stock, real estate, etc) or debt financing (foreigners buying T-bills, bonds private debt etc.). Since even with our deficit spending and a significant demand for foreign investment and debt financing, interest rates are not at all particularly high, it seems to me if we stopped consuming more than we produced, the demand of foreigners for US equity and debt would drive our interest rates NEGATIVE. How else would the demand of foreigners for equity and debt investments be brought down to zero, which is where it would need to be in order for the US to consume no more than it produced?

Am I understanding this correctly? That as long as we have open markets in debt and equity and foreigners still "demand" a constant flow of debt and equity to buy that we can never, algebraically, consume only as much as we produce?

Cheers,
R: