The Ford Factor

There’s no more of a ‘coup’ today than there was four years ago. A coup is a violent takeover, like dozens that have been organized by the CIA since WWII. One group seizes power from another group.

1977 Ford F-150 Fleet side, Source: Getty Images

Thursday, February 13^th, 2025

Bill Bonner, writing from Baltimore, Maryland

We’ve left a few important dots, like mixed cement waiting in wheelbarrows… we need to connect them before they harden up.

How come we say that stocks do not go up over the long run, when they are up 366 times since 1925?

Why is the price of a Ford pickup truck is still a good way to measure real value?

And is this a good time to buy gold, even at record high prices?

Let’s clear up the F-150 Deflator issue today… we’ll move on to the others later. But first, the dots keep coming…

Yesterday, while we were still incarcerated by the snow, we watched the most remarkable White House press conference we have ever seen. Trump, Musk and little four-year-old X in the Oval Office. And Musk did the talking!

As usual, the mainstream press went wild. They had worked months to tag ‘The Donald’ with fomenting an insurrection in Jan, 2021… and now… another coup d’etat!

• Newsweek: Top Historian Warms Elon Musk is Performing a Coup

• The Nation: Who Will Stop Elon Musk’s Coup

• The Atlantic: Elon Musk’s Bureaucratic Coup

But there’s no more of a ‘coup’ today than there was four years ago. A coup is a violent takeover, like the dozens that have been organized by the CIA since WWII. One group seizes power from another group — by force. That is not what is going on today in the US. Elon may be buying influence. Trump may be selling it… or perhaps just renting it out for a while… but it’s not a coup.

The question for us is: What is the meaning of it? Is Musk really reducing the deficit? Is he really changing the course of history? We’ll see…

In the meantime, the snow has melted away. Day to day, the weather changes. One warm day. One cold day. And yet, there’s a deeper pattern at work, a Primary Trend. Spring is coming. It is the ‘eternal return.’

The earth spins… and circles the sun. Everything begins… and ends where it started off, from dust to dust. Net zero. The only thing that is linear, with neither beginning nor end, is time. In the end, time is all we have. And most people earn their way in life by selling it, hour by hour, week by week.

The average wage was about $5,400 in 1925. Today, it’s $60,000 according to the Labor department. That puts the gain at eleven times. But the cost of a new Ford truck (basic, working man’s model) has gone up from $500 to $42,000 – 83 times.

In 1925, it took a wage earner only a bit more than a single year’s work to buy an average house. Now, it takes more than eight years. But for an investor, it took only the equivalent of 50 Dows to buy a house a hundred years ago. Now, it takes only twelve.

It’s all a bit puzzling and confusing. But we’ll figure it out.

When we were in college, we worked in the summers as a roofer. It meant carrying heavy packs of shingles on our shoulders up a steep ladder. Today, nobody does that; all the materials are unloaded from a truck by a forklift and telescoped onto the roof.

Carpenters today rarely fashion windows or doors on the job site. Nor do they cut wood with a handsaw. Instead, the parts are pre-fabbed in factories and assembled on site with nail guns, laser levels, and lifts.

But every time we mention houses or autos as a way of keeping track of real wealth, we get a note from George Gilder or another of the ‘Time Prices’ crowd telling us that our method is invalid. “Of course they are more expensive,” they say, “they’re better.”

But first, how come technology only improves the product… and not the production? Of course, it works on both ends of the assembly-line and everywhere in-between. Improvements on the production side — robotics, better materials, new techniques — should make it less expensive to turn out good products. It takes less human labor to build a Ford pickup than it did a century ago; it should also take less labor to buy it.

Also, if technology delivers a better car, and you have to pay more for it, the tech gain is a fraud. If you have to pay more — in time — for the better product, you’ve gained nothing. Because your time is limited and has to be taken away from the other things you wanted. Real net gain = zero.

Finally, the whole idea that modern things are ‘better’ is unproven. Is a cherry pie better today than the ones we ate as children? Are our blue jeans stronger, more durable? And our houses? Is Monticello inferior to a modern McMansion?

We don’t think so.

More to come…

Regards,

Bill Bonner

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Research Note, by Dan Denning

Chairman Powell, we have a problem. Following yesterday’s consumer price inflation number (which Investment Director Tom Dyson noted in his weekly update to paid readers), we’ve now learned that producer prices are rising at 3.5% per year (expectations were for 3.2% and ‘core’ PPI was up 3.6% year-over year).

If lower energy costs are no longer deflationary for producer (and consumer) prices, then inflation will indeed stay ‘higher for longer’ than the Fed’s target of 2%. When inflation is ‘sticky’ like this, it makes it harder for the Federal Reserve to cut interest rates. That takes lower rates out as a potential catalyst for higher stock prices in 2025.

But wait!

We also learned yesterday that the US government ran an $840 billion deficit in the first third of the year (a record). Revenues were up 0.7% in the period. But spending was up 15%.

Without massive federal spending cuts—which would likely cause or add to a recession in GDP and also ‘deflate’ stock prices—the US will again run a budget deficit of close to $2 trillion in 2025 (and Republicans in the House of Representatives proposed to raise the debt ceiling by $4 trillion yesterday!). More on what all this means for stocks, the dollar, and gold in my update to paid readers tomorrow.