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 Tracking inflation with the humble postage stamp
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AGgressive Metal
Administrator


USA
1937 Posts

Posted - 06/15/2010 :  17:46:13  Show Profile Send AGgressive Metal a Private Message
Tracking Inflation With the Humble Postage Stamp
by AGgressive Metal


Before the Federal Reserve System began to systematically inflate our nation's money supply through the issuance of notes masquerading as instruments properly backed by actual US dollars, the cost of a first class letter was 2 cents (see the chart below). Today it is 44 cents, and that is with the USPS losing money. That is an increase of 22 times, or a reduction in buying power of 95.5%. This is roughly equal to what Ron Paul and other hard money advocates say about our loss in purchasing power overall. The reason it is not a full 98% (the number that is sometimes quoted as the true debasement) is probably due to advances in mail sorting and transportation efficiency over the technology of the late 1800s.

As you can see, the only time the cost was above 2 cents was during the inflation occurring in the immediate aftermath of the War Between the States and during America's brief involvement in World War One beginning in 1917. However, by 1971, the final death of the quasi-gold standard, the price of postage had quadrupled. By the end of the gold/silver/dollar panic in 1981, the price had increased ten-fold. This was about correct, proportionally speaking, since gold began at $35/oz and settled down in the early 80s in the $300-400 range.

In recent history, there have been postage rate increases every year for the last four years (2006, 2007, 2008, 2009), as the monetary base in the US has increased exponentially. So ... got gold? Got silver? Got "forever stamps"?

-------------------------------------------

Rates for Domestic Letters, 1863-2009

Effective Date Postage, in Cents*

Per ½ Ounce
July 1, 1863 3
October 1, 1883 2

Per Ounce
July 1, 1885 2
November 2, 1917 3
July 1, 1919 2
July 6, 1932 3
August 1, 1958 4
January 7, 1963 5
January 7, 1968 6
May 16, 1971 8
March 2, 1974 10
December 31, 1975 13
May 29, 1978 15
March 22, 1981 18
November 1, 1981 20
February 17, 1985 22
April 3, 1988 25
February 3, 1991 29
January 1, 1995 32
January 10, 1999 33
January 7, 2001 34
June 30, 2002 37
January 8, 2006 39
May 14, 2007 41
May 12, 2008 42
May 11, 2009 44

And he that hath lyberte ought to kepe hit wel / For nothyng is better than lyberte / For lyberte shold not be wel sold for alle the gold and syluer of all the world.
-Caxton's edition of Aesop's Fables, 1484

Edited by - AGgressive Metal on 06/15/2010 18:59:36

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Nickelless
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USA
5580 Posts

Posted - 06/15/2010 :  18:16:52  Show Profile Send Nickelless a Private Message
Are postage prices a barometer of inflation or just of an agency that can't function within its budget?

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AGgressive Metal
Administrator



USA
1937 Posts

Posted - 06/15/2010 :  19:04:36  Show Profile Send AGgressive Metal a Private Message
I'd say the prices have kept pace, generally speaking, with inflation, and the shortfalls are the result of bureaucracy, government inefficiencies, pension obligations, Congress building too many branches, etc. I'm sure FedEx and UPS could offer competitive rates on first class mail if it were legal for them to do so.

And he that hath lyberte ought to kepe hit wel / For nothyng is better than lyberte / For lyberte shold not be wel sold for alle the gold and syluer of all the world.
-Caxton's edition of Aesop's Fables, 1484
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PennySaved
1000+ Penny Miser Member



USA
1720 Posts

Posted - 06/16/2010 :  18:04:23  Show Profile Send PennySaved a Private Message
It is funny that you post this; I was going through the stamp bin at the local coin/stamp store and said to one of the workers that a stamp is an excellent example of inflation. He had laughed and said he absolutely agreed.

It is cool to look through the bin and see stamps that were 1 1/2 cents.

SELLING COPPER PENNIES 1.4X FACE SHIPPED......“I sincerely believe that banking establishments are more dangerous than standing armies, and that the principles of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale” Thomas Jefferson
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Nickelless
Administrator



USA
5580 Posts

Posted - 06/16/2010 :  18:57:54  Show Profile Send Nickelless a Private Message
Postage prices prove you can't lick inflation


Visit my new preparedness site: Preparedness.cc/SurvivalPrep.net
--Latest article: Stocking up on spices to keep food preps lively

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beauanderos
1000+ Penny Miser Member



USA
2408 Posts

Posted - 06/16/2010 :  21:48:32  Show Profile Send beauanderos a Private Message
thanks for reminding me to go buy another $100 worth of forever stamps, I'm just about out of the last batch purchased when stamps were 41 cents

Hoard now and hold on!

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AGgressive Metal
Administrator



USA
1937 Posts

Posted - 06/17/2010 :  01:47:14  Show Profile Send AGgressive Metal a Private Message
Annualized that is about a 2.3% non-compounding rate of return - better than short-term treasuries, at least. (41/44 = 93.18, or 7% difference. 7% spread over 3 years = 2.3%) Obviously not as good as gold and silver, but stamps are something you need to have regardless, so forever stamps are a logical purchase, IMO. In a way, though not literally, forever stamps are an inflation-indexed transferable bearer bond issued by the Postal Service. I say not literally because obviously there is no coupon ("bond talk" for rate of interest) and also because they won't cash them for you, though liquidating them on the secondary market would probably not be difficult. The ROI is both low and uncertain, so I would never recommend them as a serious way to preserve wealth, but you really can't go wrong picking up a few sheets in lieu of regular postage. If we have hyper-inflation, you'll feel brilliant! haha

And he that hath lyberte ought to kepe hit wel / For nothyng is better than lyberte / For lyberte shold not be wel sold for alle the gold and syluer of all the world.
-Caxton's edition of Aesop's Fables, 1484
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NotABigDeal
1000+ Penny Miser Member



USA
3890 Posts

Posted - 06/17/2010 :  06:12:51  Show Profile Send NotABigDeal a Private Message
I know a guy who picked up a bunch of the forever stamps when they came out. He still buys them....

Deal

Live free or die.
Plain and simple.

"If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your council or your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen."
- Samuel Adams
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beercritic
Penny Pincher Member



USA
112 Posts

Posted - 08/08/2010 :  14:40:58  Show Profile Send beercritic a Private Message
Those "forever" stamps always made me wonder if the gov't was expecting deflationary times ahead.

______________________

The last official act of any government is the looting of the nation.

Edited by - beercritic on 08/08/2010 20:32:49
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uthminsta
1000+ Penny Miser Member



USA
1872 Posts

Posted - 08/08/2010 :  22:36:54  Show Profile Send uthminsta a Private Message
I asked at the post office sometime within the last couple weeks, and he said that a rate increase of 2c beginning January 1st 2011 had been "requested but not yet approved." I was curious because I had just found a partial roll of 42c stamps and was buying 2c stamps to make up the difference for it.

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fb101
Administrator



USA
2856 Posts

Posted - 08/09/2010 :  08:17:17  Show Profile Send fb101 a Private Message
I also worked with someone who put $500 into forever stamps at 41 cents.

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