Dick talks up his writing process in another letter to Claudia. He borrows from his own life experiences and often merges ideas from two novels into one.
In a postscript he says he ‘commanded the entity to show itself’ to him the previous night. In a hypnagogic state he saw a dead man dressed in a fawn skin on the floor. He is convinced this is Dionysus (who is related to Zagreus in Greek mythology) and in the morning he finds confirmation, in his mind at least, when he comes across something about the followers of Dionysus wearing fawn skins.
He attaches notes for his next novel which combines ideas from Valisystem A (which would go on to become Radio Free Ablemuth and later VALIS) and the previously mentioned To Scare the Dead. The protagonist is influenced by a telepathic signal from space to overthrow a government tyranny. In the remainder of his notes Dick brainstorms on the notion of retrograde time and how it can be worked into his story.