Trump needs a refresher in Economics 101

San Francisco: On Sept. 4, President Trump issued a directive to the Federal Reserve and Chair Kevin Warsh that interest rates had better be lowered or he’ll stop trading with countries the U.S. has a trading deficit with.

When a country cuts interest rates while facing growing national debt and increasing inflation, it’s almost invariably the case that inflation continues to rise and the national currency weakens. The capital required to fund a massive and growing debt burden then demands higher longer-term interest rates to offset the declining value of dollar-denominated assets. Cutting interest rates during an inflationary and increasingly debt-burdened economy risks undermining housing, consumer and corporate spending. It’s also important to recognize that the Federal Reserve’s independence, which the president’s language clearly aims to undermine, is essential for the ability of the U.S. to maintain the value of its currency and fund its deficit. Countries that believe Federal Reserve policy can be dictated by the president will become distrustful of investing their capital in the U.S. — further undermining the currency, causing economic instability and higher long-term interest rates.

If the U.S. stops trading with nations it has trade imbalances with, supply chain shortages would soar, causing products to surge in price or even be unavailable. It would be wise for the president to be mindful of his language, and perhaps take a refresher course in Economics 101.

Kearny, N.J.: Trump recently said that the war with Iran is just “small potatoes.” What an “au gratin” thing to say.

Brooklyn: If it sounds like a duck and........

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