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To: John Mansfield who wrote (609)	4/26/1998 4:07:00 PM
From: james paterson	Respond to of 3558

Ahhaha, Thanks for the interesting perspectives on inflation, deflation , POG, etc. You certainly provide food for thought. James

To: John Mansfield who wrote (609)	4/26/1998 4:59:00 PM
From: ahhaha	Read Replies (1) \| Respond to of 3558

Eurodoller is forming a major base and is about to breakout. NOT. Actually this is upside down. So get your Eurodollar chart and look at it upside down. The chart structure is called a "diamond reversal" and has been forming since last summer. This nine month top is correlated with similar structures in dollar, long term treasuries and T-Bills. You can see that the daily ranges are small. During transition periods you'll often see price compression. It means that everyone assumes business as usual and nothing of structural significance is changing. Of course, that is never true, but attention is distracted from the realities occurring under the floor boards. You don't act while compression persists; you watch for a confirmed breakout from the established price basing structure. The world wide economic structure is now transitioning from intrinsic deflation to intrinsic inflation. The Eurodollar T-Bill cumulative difference gives you advance warning about the degree of transition completion. Eurodollar holders must make far more decisive decisions about allocation and disposition of Eurodollar holdings than T-Bill holders do if only because there is the transaction intermediary necessary to achieve parity vis-a-vis a T-Bill holder. You have to dump your dollars before you can get safe in the local currency denominated vehicles whereas the T-Bill holders have such vehicles as default. So Eurodollar moves are in advance of T-Bill moves. The BOJ is selling the dollar. Ignore why. Will others follow suit? Depends upon what country in which you live. Australians should sell the Australian dollar for American dollars or for yen. You have to guess what the propensity to inflate for each country is. Australia is still a socialist camp worse than Cuba and China because at least the Chinese know tacitly that socialism is a total disaster. The mark has entered into a bull market vs the dollar. Germany is a combination of a socialist and imperialist state. The German people are obedient and are accustomed to suffering and discipline. Their fiscal and monetary policies aren't anything to get excited about, but they are one of the major wealth sources in the world because of their dedication to work. Diversification out of excess dollar holding means diversification into other currency alternatives. The only alternatives of sufficient liquidity and stability are yen, mark, pound, and franc. The British have decided to revert back to socialism, so dollars are exchanged for yen, marks and to a small extent franc, denominated entities. The activity is just a matter of reshuffling because too many dollars are being held relative to the risk. There is no wholesale movement into the other currencies because any of them are such virtuous operators. Some of the diversifiers are doing it because of the reasons I laid out elsewhere and some are doing it because growth in the US is exceeding its long term potential. Since the US is the dog and the others are the tail, get the dog inflating and the tail looks good in comparison. You have to remember that the conditions that are driving US growth certainly are occurring in other countries to various degrees. Germany, in particular, is entering a similar situation. I don't like their monetary growth, their tax structure, and the changed and lax attitude of Teitmeyer and other Bundesbank authorities. I smell pretense.