> Trade deficits are self correcting if you don't live on borrowed funds.

But we do.

Exactly, and that is the problem that needs to be fixed. Paying more for the same things doesn't solve a spending problem. It makes it worse. You could completely eliminate international trade and still have a debt problem. You just slowly sell the country and economy to lenders until there is nothing left.

Edit: when you run a deficit, you trade worthless paper for real goods and services. If you don't take on debt, they have nothing to do with it but spend more and buy more goods. If you limit debt, you get negative interest rates in real terms