Carbaugh (2011) asks, “Can the United States continue to have current account deficits indefinitely?” (p. 361). Ultimately, in the long term the answer is no, but the question could be rephrased as follows: (1) Does the United States' unique position in the world economy allow the country to safely manage persistent external deficits? and (2) is it possible to fix persistent U.S. checking and payments deficits without causing a recession or economic crisis? Japan, China, and the oil countries of the Middle East have allowed this deficit to continue by investing heavily in US Treasury securities (Carbaugh, 2011). Because foreigners desire to purchase American assets, Carbaugh (2011) concludes that “there is no economic reason why [the U.S. current account deficit] cannot continue indefinitely” (pp. 361–362). Deutsche Bank Research (Karczmar, 2004), in examining “widespread concerns and fears about how long this condition might last and how it might be corrected,” further concludes: “A closer look at this issue shows, however, that the concerns are far from justified and the fears greatly exaggerated” (p. 8). In this context, it is appropriate to evaluate the two questions raised above regarding U.S. external current account deficits.(1) Does the United States' unique position in the world economy enable the country to safely manage persistent external deficits? The world relies on the US dollar – over 60% of global monetary reserves are held in US dollars – 61.4% in the third quarter of 2013 (International Monetary Fund, 2013). Accordingly, Deutsche Bank Research (Karczmar, 2004) concludes that the function of the US dollar as the main reserve currency makes current account deficits inevitable... Retrieved from http://www.imf.org/External/np/sta /cofer/eng/index.htmKarczmar, M. (2004). The American balance of payments: widespread misunderstandings and exaggerated concerns. Frankfurt am Main, Germany: Deutsche Bank Research. Retrieved from http://dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000180032/The+U_S_+balance+of+payments%3A+widespread+misconceptions+and+exaggerated+worries.pdfLizardo, R.A., & Mollick, A. ( 2009). The sustainability of the US current account deficit: revisiting Mann's rule. Journal of Global Economics, 9(4), 1-19. doi:10.2202/1524-5861.1532Obsfeld, M., & Rogoff, K. S. (2005). Global current account imbalances and exchange rate adjustments. Brookings Papers on Economic Activity, 2005(1), 67-146. Tobin, J. (1990). Eight myths about the dollar. In S. Gerlach and P. A. Petri, In The Economics of the Dollar Cycle. Cambridge, MA: MIT Press.