The golden dreams of cheap money, full employment, no inflation and prosperity for all,has never graced the world simultaneously. Oh sure, one nation has experienced thisphenomenon for a brief period in time at the expense of its neighbors; but it has neverlasted. Such goals on a long-term basis are mere fables for children told to comfortthem and their fears of the oncoming night. The long-term models, which we havedesigned, have foretold of events in a far different light than most. March, we warned,was the ideal turning point for interest rates, particularly on the short-term. This recenthike in the prime rate is not a freak, but a forewarning of what is yet to come. It came onthe heels of our model so quickly, that this in itself is not a omen of stability, but achange in the winds of destiny.At the 1985 Economic Conference held here in Princeton, I went over our long-termmodels on over 300 various economic indicators from 35 different nations. In each case,it was pointed out that the VOLATILITY was increasing with each turning pointthroughout this century. The fact that the model called for the turning point to be inMarch of 1987 for the short-term rates is important. But of even greater importance isthe fact that under normal conditions, a rate hike would take place within 3 months ofreaching a major turning point. In this case, the first rate hike in years came precisely onthe turning point. This is itself forewarning of even greater VOLATILITY than what wasdiscussed at the 1985 Economic Conference.This subtle glitch, as everyone is calling it, is more serious than we had expected. Themere fact that it has come so soon in conjunction with the major cyclical target,suggests that the upside potential in interest rates will be far greater than we have beentalking about. We could easily see levels matching those of 1981 by January 1990 andthis may be too conservative at that. The confirmation as to whether or not we are infact in a new uptrend in interest rates overall, will arrive when the Federal ReserveDiscount Rate exceeds 6%. When that happens, then the possibility of this being amere glitch, will forever be erased from our financial history.O'Shaughnessy's words themselves express the overall role of us all in this battlebetween the free markets and the aspirations of our Napoleonic forms of financialgovernments who seek to manipulate and control our economic social interaction. Forindeed we are perhaps a bunch of world losers who really do not know what lies ahead,but the mystical aspect behind our power lies in our sheer numbers. Governmentintervention can never work for a variety of reasons. If the central banks wish to supportthe dollar, and the free market forces continue to add selling pressure, the only way thecentral banks can hold their ground in terms of supporting the dollar will be tocontinually buy all that is offered. The outstanding supply of paper money in circulationvastly outnumbers the buying power of the central banks. Even collectively, their totalinfluence upon the money supply can at best reach 6-7% or roughly the amount ofreserves it requires from its member banks. Thus, these scares which inflict thecurrencies sporadically, have been merely temporary. The forces of volatility are alwaysinfluenced by psychological implications of the central banks rather than the realamount of currencies they buy or sell through their intervention practices.