Current Account is one of the two components of Balance of Payments, the other one being the Capital Account. The Current Account balance measures a countrys nature of foreign trade. A surplus in current account increases a countrys net foreign asset by a certain amount whereas a current account deficit is the amount that the country does not have in order to finance its current expenditures. A current account comprises of balance of trade, net factor income and net unilateral transfers from abroad. Balance of trade is a countrys difference between its imports and exports. Net factor income is the net amount of foreign inflows. From 1991 to 2006, the US current account deficit has risen from 0 to 6.5. Coupled with the increase in domestic consumption in US, one of the reasons behind the increase in the current account deficit is a major import of goods and services from China and other Asian economies. Oil imports and increasing oil prices till 2008 also added pressure on US current account. Running a high current account deficit for prolonged periods can have serious consequences for an economy. US till now has been successfully able to finance its deficit by raising debt through T-bills Bonds in the international markets. Main holders of the US debt are Asian economies like Japan, China Korea. By selling more debt to foreign economies, US is providing greater control to these nations over dollar. If a few nations start to liquidate their dollar holdings or convert them to some other currency or commodities like gold, it can result in an economic chaos and make extremely difficult for US to finance the deficit from international markets. However, to bring the situation under control, US will have to change its economys dynamics by shifting from a consumption based economy to a saving based economy and therefore, a slight increase in Fed rates is required. The recent weakening in dollar has done little to slow down the further deterioration of deficit. US will also have to reduce its reliance on imports and reduce its federal budget as it is expected to boost domestic savings.