The Strange Reality of “False Demand”
With many people saying that the economic situation in the USA is a bit dodgy these days, there are also many who are looking at the so-called "good old days" as being better than what we have today.
Often cited is this idea that in the 1960s you could live decently on a single income and still have a house in the burbs and a car and so forth, while in 2025 that is virtually an impossibility.
I suppose it's not a completely ridiculous claim: My dad had a job in management and my mom stayed home and kept house, we had a nice house, two cars and went on vacation here and there.
Meanwhile, there is certainly some evidence to support the impossibility of doiing the same in 2025, specifically in the area of housing where many point out that in 1965 it was fairly typical that a single family home cost about 2.2 times the median annual salary while in 2025 it is something on the order of 5.6 times your annual salary. We're just talking about median numbers here, for both houses and income.
Of course apologists for how well we have it nowadays come back and point out that the average house in 2025 is much larger than the average house was in 1965 and has many more features and luxuries than we had back then. As such we're supposedly much better off.
Of course this is where I get really frustrated with people because they are essentially basing their perspective on something I call "false demand."
When I call it false demand what we're really talking about is that we are better off because we have 2500 square foot houses instead of 1200 square foot houses, and they have many more luxury features... but that assumes that we actually want 2500 square foot houses that we can't afford loaded down with all kinds of features.
With Mrs. Denmarkguy and I looking to downsize and move into a smaller home within the next few years, the sad reality is that that 1965 small home — that's relatively basic and simple without a bunch of luxury features; to be honest, I don't want organically harvested rare wood countertops hand polished by Moroccan virgins — simply isn't available to be bought in 2025, and nobody is building it, either.
False demand basically assumes that people actually want the things that allegedly makes them better off but that also cost more. No thanks! I want that smaller cheaper place, so I can put the rest of the money into income producing investments.
In a parallel sort of way, I'm seeing this at my local supermarket as well in the form of what I call "creepflation." Lately our local grocery store stopped carrying our favorite kind of coffee that was also quite affordable. They just stopped carrying it. It's still made, they just stopped offering it. The space on the shelf is instead allocated to the same size package of coffee from a local "craft coffee" supplier that costs $15.99 for a 12oz (340gr) package.
Quite simply, the choice that I'm looking for has been eliminated from the market just like it has happened with aforementioned housing.
Aside from the term "false demand," another term I use a lot these days is "induced poverty." Induced poverty is making sure that the price of many basics people need to live essentially stay just out of reach of most people with median incomes or below. These days it is particularly visible when it comes to housing, but it exists in many kinds of inflation, whether it be the price of coffee or the price of eggs.
I think what frustrates me about it all is the fact that we're allowing some kind of economists or corporate profiteer to tell us what constitutes "better off" rather than leaving that decision up to the individual who's actually consuming the product!
I'm not impressed!
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Created at 2025.10.08 23:58 PST
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I have talked to an American, he was born on the 1961. He said that life before in the U.S is very different from now. Before his dad works and his mom stayed home to take care of him and the house chores. they also have two cars and they can go to vacations twice a year. People thinks they are rich but the truth is they are just a regular citizens yet before the banks give good interest and dividend.