Amid today's bad news, there was one piece of good news.

The current account deficit is narrowing. It looks to have made a (negative) bottom.

Ordinarily, before we get a solid stock market bull market and an economic recovery, the current account goes positive as U.S. saving increases. That rule didn't work in the last 10 bubble years. But that's over and done with. Some solid decreases in this deficit mean that domestic savings are on the rise. That's a big plus. It sets the stage for eventual recovery and a solid bull market in stocks.

The Fed is holding firm with low M1 growth. It keeps draining. This is a plus.

However, there is and will be tremendous pressure on the Fed to convert the debts/credits that are in the big M3 growth into growth in narrow money, M1. In the past, they caved, and that's why they created a rollercoaster. So far, Bernanke has successfully made the politicians who don't know anything believe that he is doing what he can to bail out the system. But those who want more outright reserve and M1 growth are going to be bending ears in Congress and the pressures will increase on Bernanke.

Today a slew of commodities fell sharply, such as copper, nickel, and ag products. This is another plus. Gold and silver may be the last to top out, especially if Bernanke and the Fed give in and begin inflating bank reserves and M1. The commodity price drops suggest that the deflation hypothesis is the correct one. There has been something of a flight to commodities. Plus there are special factors. China's wheat situation has been very bad in the past few years, and the terrible weather did not help this year.

The U.S. economy needs one thing badly: domestic savings, not fiat money false-savings. It can't go on forever with foreign central bank inspired loans. It will help if stocks decline a lot more, to where dividend yields are 4-5%, because then the returns on stocks will be higher and attract value investors. It will help if the Federal government reduces taxes on savings and ends subsidies to consumption. I'm not holding my breath.