Center for Agricultural and Rural Development
Center for Agricultural and Rural Development

Two Sides of the Same Ledger: Why the World’s Lowest Interest Rates, A Smaller Trade Deficit, and More Foreign Financing Cannot All Be Achieved at Once

September 2026 [26-PB 54]
Authors:
  • John M. Crespi
  • Sunghun Lim
  • Rajesh Singh

Suggested citation

Crespi, J.M., S. Lim, and R. Singh. 2026. “Two Sides of the Same Ledger: Why the World’s Lowest Interest Rates, A Smaller Trade Deficit, and More Foreign Financing Cannot All Be Achieved at Once.” Policy brief 26-PB 54. Center for Agricultural and Rural Development, Iowa State University.

Summary

On September 4, 2026, President Donald Trump posted a note directed at the U.S. Federal Reserve on Truth Social saying (emphasis his): “A STRONG COUNTRY MEANS A LOWER INTEREST RATE — IT'S A BETTER CREDIT…Very simple! We should have the LOWEST RATE of any country in the World, like “the old days.” Without the United States agreeing to allow them their big surpluses, and we could stop that immediately, they would no longer be considered financially ELITE! LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT…”

Along with the president’s calls for more foreign investment in the United States, this statement adds two more goals: the world's lowest interest rates and an end to America's trade deficits. Each goal is popular. Taken together, however, they pull against one another, and the reason is largely a matter of accounting rather than economic policy. That is the subject of this brief.