What is the hottest current policy debate among academic geeks, policy wonks and market gurus? The Bretton Woods 2 hypothesis: i.e. the view that the world is effectively back to a regime of global fixed exchange rates pegged to the US dollar like the original Bretton Woods regime that lasted from 1945 to 1973. Global fixed exchange rates? This BW2 hypothesis has been forcefully advanced by three economists affiliated with Deutsche Bank, namely David Folkerts-Landau (Global Head of Research at DB), Peter Garber (Global Strategist at DB) and Michael Dooley (formerly head of EM research at DB and now back to academia at UC Santa Cruz). David, Peter and Mike are three extremely smart folks and when they speak and write, people listen to them. They have recently written four papers (An Essay on the Revived Bretton Woods System; The Revived Bretton Woods System: The Effects of Periphery Intervention and Reserve Management on Interest Rates & Exchange Rates in Center Countries; Direct Investment, Rising Real Wages and the Absorption of Excess Labor in the Periphery; and The US Current Account Deficit and Economic Development: Collateral for a Total Return Swap ) where they argue that the international financial system is experiencing today the reemergence of a new Bretton Woods regime of global fixed exchange rates (Bretton Woods 2 or BW2). In this view, this new BW2 regime will allow the U.S. to finance its large current account deficit at a low cost for a long time; consequently, the United States growing external indebtedness poses few immediate concerns. So, while everyone else is worrying about the US current account deficits and the global imbalances, the three DB gurus tell us not to worry about them and enjoy the US current account deficit.