This paper examines external adjustment in the USA, Japan and Germany from the perspective of net foreign asset positions. It asks two questions: What are, in the long run, the determinants of net foreign asset equilibrium? What are, in the short run, some of the adjustment mechanisms sustaining that equilibrium? An analysis of post-war data produces two insights. First, using a cointegration approach, the existence of long-run net foreign asset equilibrium can be identified: it is a function of demographic variables and public debt. Second, deviations from long-run equilibrium give rise to feedback through different components of domestic absorption in the three countries.