The cost of living

Anybody in this great country of ours is free to do and say as he or she pleases.

That is not what bothers me. What truly bothers me are the misconceptions that negatively affect the lives of Americans—needlessly.

Many of us seem to live in some kind of meta-reality that is very much removed from actual reality, facts and data:

First: Today, I saw two older ladies in the supermarket trudging along with face masks covering most of their faces. This is proof positive of how the recent 

COVID-19 epidemic continues to negatively affect the American psyche. In this case, these ladies needlessly subject themselves to the inconvenience of the face mask.

It was Dr. Fauci, the epidemiologist and the adviser to two American presidents, who stated in front of a congressional committee in June 2024 that there was 

never any scientific proof of the efficiency of the measures Dr. Fauci himself instituted against the spread of the COVID-19 virus.

Surgeons have been using face masks for more than 100 years to avoid breathing their potentially infected breath on the open wound of a patient.

But that does not mean a face mask is effective against the spread of any virus. 

It is not only the fact that epidemiologists do not have any idea, more than 100 years after the Spanish flu epidemic, how any virus spreads in the environment. 

The fact remains that we would have to wear industrial respirators to achieve the effect ascribed to the face masks today.

The infected person can breathe out infected air around his mask into the surrounding air. Equally, a non-infected person can breathe in the infected air from the surrounding air around his face mask.

Second: We were buying some Australian lamb. It cost $10.99 a pound. 

Another shopper commented that everything was very expensive. I tried to tell him that I have economic data showing that nearly all the products, except for housing—that is a special case because of high demand. Americans have been buying houses left and right, and even overbidding the asking prices, as seen during the recent epidemic. New houses are 50 percent larger than 50 years ago, are less expensive than 50 years ago—and even less than five years ago, when adjusted for inflation.

I also wanted to point out that household incomes have been rising slightly above the rate of inflation for decades, thereby slowly increasing the American standard of living.

But I did not get that far because he clearly did not believe me, turned away and told his wife to take a three-pound steak instead of the two-pounder she selected.

This gentleman was clearly one of those who "knows" that inflation is very high and that the prices of everything are through the roof.

This is sometimes combined with the false complaint that President Trump promised to lower inflation, but he did not.

The problem I see here is that:

1. Such an opinion is false and makes the believer in it needlessly unhappy, and
2. It is based on the lack of knowledge of economics and, above all, the mathematics of inflation.

In simple terms, the inflation from January 1975 through July 2025 has been 520 percent. This means that $1 in 1975 is worth $6.20 today (not just $5.20).

The average price of meat was $1.80 a pound in 1975. $1.80 in 1975 equals $11.16 today.

Yet, we are buying lamb for $10.99 a pound, steak for $5 to $10 a pound, pork for as little as $1.29 a pound and chicken drumsticks for 99 cents a pound. 

Notwithstanding the Japanese Kobe steaks for snobs at $400 a pound.

A similar situation and inflation numbers apply to the period from January 2020 through July 2025.

Third: The current annual inflation is 2.5 percent to 2.7 percent per year. Cumulative inflation from January 2020 through July 2025 has been 25 percent. This means that 

everything is 25 percent more expensive in July 2025 than it was in January 2020 through the COVID-19 epidemic, when inflation reached a high of 9.06 percent in June 2022. 

Thus, $1 in January 2020 equals $1.25 today. Household incomes have increased at a similar pace.

Yet, there was a video in the media recently in which a young lady from Michigan was literally crying that she could not make it because everything was so expensive. This has nothing to do with reality; it is based on 

a severe lack of understanding of the mathematics of inflation.

Our FED adopted an annual inflation target of 2 percent, which has been emulated by the central banks the world over. Yet, the 2 percent inflation target is not the result of 

any scientific economic study. As it was pulled out of the thin air, this target could be either 1 percent or 3 percent just as well.

The only thing we know for a fact is that a low but positive annual inflation target is a good thing in that it protects us against the dreaded deflation. That happens when prices start dropping uncontrollably, producers and retailers are unable to recover their costs, and a wave of bankruptcies ensues.

I know that I sound like a broken record when I say what I have said several times before: Americans would be best advised to relax, smell the roses, fire their therapists and enjoy their good fortune of being born and living in the richest, the most democratic and the most free country in the world, with a high standard of living for the common man, never before seen on Earth.

Ivan Orisek lives in Forestburgh, NY. Von Mises is an occasional column that explores economics and the reasons behind the numbers.